Opinion by: Invoice Repasky, legal professional at Frost Brown Todd LLP
With greater than 55 million Individuals now utilizing cryptocurrency of their day by day lives, cryptocurrencies have change into an integral element of our nation’s monetary system.
Similar to conventional ATMs, tens of hundreds of digital foreign money kiosks — often known 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 every new expertise, scammers have discovered 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 inside the cryptocurrency ecosystem.
Fortunately, there are higher, confirmed methods to fight crypto scams that protect this necessary 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 by way of 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 susceptible folks into changing fiat cash into cryptocurrency on the kiosks, usually immediately into the scammer’s pockets — an motion that’s irreversible and infrequently 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 felony impersonating legislation enforcement into making a $15,000 deposit at a crypto ATM.
In line with 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 shoppers misplaced to monetary fraud in 2024, it’s clearly a rising drawback that must be addressed.
The issue with blanket bans
Spokane, Washington made waves when it banned crypto ATMs utterly, 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 in the end profitable as a result of it exploits human vulnerabilities, not due to anybody expertise. Banning crypto ATMs, somewhat 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 more practical answer — that means crypto ATMs generally is a key device for stopping fraud. This entails warning customers that they need to not interact in transactions with folks posing as legislation enforcement or different trusted people. It will probably additionally imply informing customers that cryptocurrency transactions can’t be reversed and are sometimes untraceable. Suppliers may also supply tailor-made warnings of surprising exercise primarily based on person profiles.
Associated: Crypto ATM limits and bans sweep throughout US: Right here’s why
A lot 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 person preferences, utilizing their experience to implement efficient fraud prevention techniques whereas nonetheless serving prospects’ banking wants.
State regulators may also play a necessary function, making licensure for crypto ATMs conditional on implementing efficient fraud warning guidelines and protocols for person interactions. These uniformly enforced laws will compel operators to compete for enterprise by offering a superior person expertise, somewhat 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 (despite the fact that there aren’t any within the city but), which town council mentioned would supply “slightly little bit of assist” and transparency for residents, particularly those that may be unfamiliar with cryptocurrency or unaware of frequent scams.
Defending shoppers, unleashing innovation
Blanket bans on digital foreign money kiosks won’t ever remedy the age-old fraud drawback. Scammers will discover different methods to achieve their victims, however the hundreds of thousands of cryptocurrency customers across the nation will lose entry to this necessary monetary infrastructure.
As a substitute, involved regulators ought to encourage ATM operators to leverage confirmed fraud prevention methods to interrupt fraudsters and defend potential victims from making a mistake. These instruments supply a wiser method, one which each protects shoppers and preserves the thrilling prospects of cryptocurrency.
Opinion by: Invoice Repasky, legal professional at Frost Brown Todd LLP.
This text is for normal data functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the creator’s alone and don’t essentially replicate or characterize the views and opinions of Cointelegraph.
