Banning virtual currency kiosks is no solution to fraud

Explore insights within the AI & Blockchain house. This article dives into: “Banning virtual currency kiosks is no solution to fraud”.

Opinion by: Bill Repasky, legal professional at Frost Brown Todd LLP

With greater than 55 million Americans now utilizing cryptocurrency of their each day lives, cryptocurrencies have change into an integral element of our nation’s monetary system. 

Just like conventional ATMs, tens of 1000’s of virtual currency kiosks — often known as Bitcoin ATMs — have popped up in communities across the United States to help cryptocurrency transactions, from changing money into crypto to shopping for and promoting cash. The passage of the GENIUS Act could enlarge the general public’s demand for Bitcoin ATMs as stablecoins are launched.

Unfortunately, as with all new expertise, scammers have realized how to use these instruments to commit fraud. Hoping to shield residents, some localities have responded by banning these kiosks altogether. 

This isn’t a sensible or efficient solution — and it presents an actual risk to all customers and operators throughout the cryptocurrency ecosystem. 

Thankfully, 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 want to urgently hand over massive sums of cash by way of cryptocurrencies like Bitcoin to keep away from jail or another disaster. The FinCEN Notice of Aug. 4, 2025, FIN-2025-NTC1, explores widespread 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 is 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 legislation enforcement into making a $15,000 deposit at a crypto ATM. 

According to the FBI’s 2024 Internet Crime Report, there have been greater than 10,956 complaints of crypto ATM fraud totaling $246.7 million in losses final 12 months — a 99% and 31% enhance from 2023, respectively. While this is only a small element of the $12.5 billion customers misplaced to monetary fraud in 2024, it’s clearly a rising drawback that wants to be addressed.  

The drawback with blanket bans

Spokane, Washington made waves when it banned crypto ATMs utterly, a transfer town council claimed would assist shield residents and forestall fraud. 

This technique is very similar to banning electronic mail to eradicate phishing makes an attempt or prohibiting aged folks from shopping for present playing cards to hold 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 anyone expertise. Banning crypto ATMs, quite than specializing in methods to mitigate the danger of scams, will simply lead victims to full the fraudulent transaction in different methods.

Practical options for minimizing fraud

Intercepting the rip-off on the level when a sufferer is about to full the transaction is usually a simpler solution — that means crypto ATMs is usually a key device for stopping fraud. This includes warning customers that they need to not have interaction in transactions with folks posing as legislation enforcement or different trusted people. It can even imply informing customers that cryptocurrency transactions can’t be reversed and are sometimes untraceable. Providers can even supply tailor-made warnings of bizarre exercise based mostly on person profiles.

Related: Crypto ATM limits and bans sweep throughout US: Here’s why

These forms of interventions have confirmed profitable with different forms of monetary fraud, like wire transfers and even common ATM withdrawals. Reputable 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 clients’ banking wants.

State regulators can even play an important 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, quite than compromising on security. 

Some legislators are even taking this strategy 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 “a little bit of help” and transparency for residents, particularly those that may be unfamiliar with cryptocurrency or unaware of widespread scams. 

Protecting customers, unleashing innovation 

Blanket bans on virtual currency kiosks won’t ever remedy the age-old fraud drawback. Scammers will discover different methods to attain their victims, however the hundreds of thousands of cryptocurrency customers across the nation will lose entry to this necessary monetary infrastructure. 

Instead, involved regulators ought to encourage ATM operators to leverage confirmed fraud prevention methods to interrupt fraudsters and shield potential victims from making a mistake. These instruments supply a better strategy, one which each protects customers and preserves the thrilling prospects of cryptocurrency.

Opinion by: Bill Repasky, legal professional at Frost Brown Todd LLP.

This article is for normal info functions and is not supposed to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed here are the writer’s alone and don’t essentially mirror or symbolize the views and opinions of Cointelegraph.

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