Opinion by: Invoice Repasky, legal professional at Frost Brown Todd LLP
With greater than 55 million People now utilizing cryptocurrency of their every day lives, cryptocurrencies have turn out to be an integral element of our nation’s monetary system.
Similar to conventional ATMs, tens of hundreds of digital foreign money kiosks — also referred to as Bitcoin ATMs — have popped up in communities round america to help cryptocurrency transactions, from changing money into crypto to purchasing and promoting cash. The passage of the GENIUS Act might enlarge the general public’s demand for Bitcoin ATMs as stablecoins are launched.
Sadly, as with all new know-how, scammers have realized the best way to use these instruments to commit fraud. Hoping to guard residents, some localities have responded by banning these kiosks altogether.
This isn’t a sensible or efficient answer — and it presents an actual risk to all customers and operators throughout the cryptocurrency ecosystem.
Fortunately, there are higher, confirmed methods to fight crypto scams that protect this essential monetary infrastructure.
The rise of crypto ATM scams
Many crypto ATM scams contain persuasive criminals masquerading as authority figures, luring their victims into considering they should urgently hand over giant sums of cash through cryptocurrencies like Bitcoin to keep away from jail or another disaster. The FinCEN Discover of Aug. 4, 2025, FIN-2025-NTC1, explores frequent fraud schemes intimately.
These scammers trick weak folks into changing fiat cash into cryptocurrency on the kiosks, usually instantly into the scammer’s pockets — an motion that’s irreversible and sometimes untraceable.
When introducing the Crypto ATM Fraud Prevention Act, for instance, Senator Dick Durbin relayed a narrative of a constituent who was tricked by a legal impersonating regulation enforcement into making a $15,000 deposit at a crypto ATM.
Based on the FBI’s 2024 Web Crime Report, there have been greater than 10,956 complaints of crypto ATM fraud totaling $246.7 million in losses final yr — a 99% and 31% enhance from 2023, respectively. Whereas that is only a small element of the $12.5 billion customers misplaced to monetary fraud in 2024, it’s clearly a rising downside that must be addressed.
The issue with blanket bans
Spokane, Washington made waves when it banned crypto ATMs fully, a transfer town council claimed would assist defend residents and stop fraud.
This technique is very like banning e mail to get rid of phishing makes an attempt or prohibiting aged folks from shopping for reward playing cards to maintain them from falling into the fingers of scammers.
Fraud is finally profitable as a result of it exploits human vulnerabilities, not due to anybody know-how. Banning crypto ATMs, fairly than specializing in methods to mitigate the chance of scams, will simply lead victims to finish the fraudulent transaction in different methods.
Sensible options for minimizing fraud
Intercepting the rip-off on the level when a sufferer is about to finish the transaction is usually a simpler answer — which means crypto ATMs could be a key device for stopping fraud. This includes warning customers that they need to not interact in transactions with folks posing as regulation enforcement or different trusted people. It might additionally imply informing customers that cryptocurrency transactions can’t be reversed and are sometimes untraceable. Suppliers can even supply tailor-made warnings of surprising exercise primarily based on consumer profiles.
Associated: Crypto ATM limits and bans sweep throughout US: Right here’s why
A majority of these interventions have confirmed profitable with different forms of monetary fraud, like wire transfers and even common ATM withdrawals. Respected crypto ATM operators are already staying abreast of the most recent scams and consumer preferences, utilizing their experience to implement efficient fraud prevention ways whereas nonetheless serving clients’ banking wants.
State regulators can even play a necessary function, making licensure for crypto ATMs conditional on implementing efficient fraud warning guidelines and protocols for consumer interactions. These uniformly enforced laws will compel operators to compete for enterprise by offering a superior consumer expertise, fairly than compromising on security.
Some legislators are even taking this method proactively, earlier than locals encounter fraud. For instance, the city of Grosse Pointe Farms, Michigan preemptively put in place registration and warning necessities on crypto ATMs (regardless that there aren’t any within the city but), which town council stated would supply “somewhat little bit of assist” and transparency for residents, particularly those that may be unfamiliar with cryptocurrency or unaware of frequent scams.
Defending customers, unleashing innovation
Blanket bans on digital foreign money kiosks won’t ever clear up the age-old fraud downside. Scammers will discover different methods to succeed in their victims, however the thousands and thousands of cryptocurrency customers across the nation will lose entry to this essential monetary infrastructure.
As a substitute, involved regulators ought to encourage ATM operators to leverage confirmed fraud prevention strategies to interrupt fraudsters and defend potential victims from making a mistake. These instruments supply a better method, one which each protects customers and preserves the thrilling potentialities of cryptocurrency.
Opinion by: Invoice Repasky, legal professional at Frost Brown Todd LLP.
This text is for basic data functions and isn’t supposed to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed here are the creator’s alone and don’t essentially mirror or symbolize the views and opinions of Cointelegraph.
