Opinion by: Bill Repasky, attorney at Frost Brown Todd LLP
With over 55 million Americans integrating cryptocurrency into their everyday lives, cryptocurrencies have become a vital part of our nation’s financial landscape.
Similar to traditional ATMs, a vast network of virtual currency kiosks — commonly referred to as Bitcoin ATMs — has emerged across the United States, facilitating cryptocurrency transactions, from cash-to-crypto conversions to coin trading. The introduction of the GENIUS Act could further increase public interest in Bitcoin ATMs as stablecoins come into play.
Unfortunately, as seen with any emerging technology, scammers have adapted these tools to perpetrate fraud. To protect their communities, some local governments have opted to prohibit these kiosks entirely.
This approach is neither practical nor effective, posing real risks to all users and operators within the cryptocurrency ecosystem.
Fortunately, there are more effective methods to combat crypto scams that maintain this crucial financial infrastructure.
The rise of crypto ATM scams
Many scams associated with crypto ATMs involve convincing criminals posing as authority figures, misleading victims into believing they must urgently transfer large amounts of money via cryptocurrencies like Bitcoin to evade jail or another crisis. The FinCEN Notice of Aug. 4, 2025, FIN-2025-NTC1, elaborates on common fraud schemes.
These fraudsters deceive vulnerable individuals into exchanging fiat currency for cryptocurrency at the kiosks, often directing it straight into the scammer’s wallet — an irreversible and frequently untraceable action.
While introducing the Crypto ATM Fraud Prevention Act, Senator Dick Durbin recounted a constituent’s experience of being duped by a scammer impersonating law enforcement, resulting in a $15,000 deposit at a crypto ATM.
According to the FBI’s 2024 Internet Crime Report, over 10,956 reports of crypto ATM fraud incurred losses of $246.7 million last year — marking a 99% and 31% increase respectively from 2023. While this represents a small fraction of the $12.5 billion in consumer losses to financial fraud in 2024, it clearly signifies a growing concern that requires attention.
The problem with blanket bans
Spokane, Washington stirred controversy by entirely banning crypto ATMs, a move purportedly intended to protect residents and curb fraud.
This tactic resembles banning email to eliminate phishing attacks or forbidding elderly individuals from purchasing gift cards to protect them from scammers.
Fraud prevails because it exploits human weaknesses, not due to any specific technology. Prohibiting crypto ATMs rather than focusing on risk mitigation strategies will simply drive victims to complete fraudulent transactions through alternative means.
Practical solutions for minimizing fraud
Stopping a scam at the moment a victim is about to finalize a transaction can often be a more effective strategy — suggesting that crypto ATMs could play a critical role in fraud prevention. This includes alerting users against engaging in transactions with impersonators of law enforcement or other trusted figures. It also involves informing users that cryptocurrency transactions are irreversible and commonly untraceable. Providers may also furnish targeted warnings about atypical activities based on user profiles.
Related: Crypto ATM limits and bans sweep across the US: Here’s why
Such interventions have been effective in combatting other forms of financial fraud, such as wire transfers or even standard ATM withdrawals. Reputable crypto ATM operators are already adapting to emerging scams and user preferences, leveraging their expertise to implement effective fraud prevention measures while still catering to customers’ banking needs.
State regulators can also assume a vital role by making licensure for crypto ATMs contingent on effective fraud warning procedures and user interaction protocols. Consistently enforced regulations will compel operators to enhance user experience while prioritizing safety.
Some legislators are proactively adopting this approach before localities face fraud. For instance, the town of Grosse Pointe Farms, Michigan, has instituted registration and warning prerequisites for crypto ATMs (even in the absence of such kiosks in the town), which the city council believes will provide residents, especially those unfamiliar with cryptocurrency or common scams, with “a little bit of help” and transparency.
Protecting consumers, unleashing innovation
Broad bans on virtual currency kiosks will never resolve the long-standing issue of fraud. Scammers will persist in finding other avenues to reach their victims, while millions of cryptocurrency users nationwide will lose access to this essential financial infrastructure.
Instead, concerned regulators should urge ATM operators to adopt reliable fraud prevention strategies to thwart fraudsters and safeguard potential victims from making errors. These measures provide a more intelligent approach, preserving consumer safety while maintaining the thrilling prospects of cryptocurrency.
Opinion by: Bill Repasky, attorney at Frost Brown Todd LLP.
This article is for general informational purposes and is not intended and should not be considered as legal or investment advice. The views, thoughts, and opinions expressed here belong solely to the author and do not necessarily represent the views and opinions of Cointelegraph.
