Opinion: Bill Lepasky, lawyer for Frost Brown Todd LLP
With over 55 million Americans currently using cryptocurrencies in their daily lives, cryptocurrencies have become an integral part of our country’s financial system.
Like traditional ATMs, tens of thousands of cryptocurrency kiosks, also known as Bitcoin ATMs, have appeared in the US community to support cryptocurrency trading, from converting cash into cryptocurrency to buying and selling coins. The passing of the Genius Act could expand public demand for Bitcoins ATMs, as Stablecoins was introduced.
Unfortunately, like other new technologies, scammers have learned how to use these tools to commit fraud. In hopes of protecting residents, some areas responded by banning these kiosks entirely.
This is not a practical or effective solution. It also poses a real threat to all users and operators within the cryptocurrency ecosystem.
Thankfully there is a better and proven way to combat crypto fraud that maintains this critical financial infrastructure.
The rise of crypto ATM fraud
Many crypto ATM scams include persuasive criminals who pretend to be authority figures, making the victim think that large sums of money must be urgently handed over cryptocurrencies such as Bitcoin to avoid prisons and other catastrophes. The Fincen notification for FIN-2025-NTC1 on August 4, 2025 examines common fraud schemes in detail.
These scammers trick vulnerable people into converting Fiat money into kiosk cryptocurrency. Often, it fits directly into the scammer’s wallet.
For example, when introducing the Crypto ATM Fraud Prevention Act, Sen. Dick Durbin told the story of a constituent who was fooled by detectives to impersonate law enforcement and create a $15,000 deposit in a crypto ATM.
According to the FBI’s 2024 Internet Crime Report, there were over 10,956 complaints about a total loss of $246.7 million in Crypto ATM fraud last year. This is a small factor in the $12.5 billion consumers lost in financial fraud in 2024, but it’s an increase in issues that need to be addressed.
Issues regarding the ban on blankets
Spokane, Washington, caused waves when it banned crypto ATMs altogether. The move the city council claims will help protect residents and prevent fraud.
This strategy is much like banning emails to eliminate phishing attempts or banning older people from purchasing gift cards to prevent fraudsters from falling into the hands of scammers.
Scams ultimately succeed because they take advantage of human vulnerabilities, not just for one technology. Rather than focusing on ways to mitigate the risk of fraud, banning crypto ATMs only leads victims to complete fraudulent transactions in other ways.
Practical solutions to minimize fraud
Intercepting fraud when the victim is about to complete the transaction is often a more effective solution. In other words, cryptographic ATMs become an important tool to prevent fraud. This includes warning users that they should not engage in dealing with law enforcement or other people pretending to be trustworthy individuals. It also allows users to notify them that cryptocurrency transactions are often not reversible and that they cannot be tracked. Providers can also provide tailored warnings for unusual activities based on their user profile.
Related: Crypto ATM restrictions and bans clean us: This is why
These types of interventions have proven successful in other types of financial fraud, such as wire transfers and regular ATM withdrawals. Reputable Crypto ATM operators are already lagging behind the latest fraud and user preferences, using their expertise to implement effective fraud prevention tactics while meeting the needs of their customers’ banks.
State regulators can also play a key role and create licenses for cryptographic ATMs subject to the implementation of effective fraud warning rules and protocols for user interaction. These uniformly enforced regulations force operators to compete for their business by providing a superior user experience rather than undermining safety.
Some lawmakers are actively adopting this approach before locals encounter fraud. For example, the town of Gross Point Farms, Michigan, has preemptively introduced crypto ATM registration and warning requirements (although it’s not in town yet), and the city council will provide “a little help” and transparency, particularly those unfamiliar with cryptocurrency and perceptions of fraud in general.
Protect consumers and unleash innovation
The ban on blankets on crypto kiosks never solves the problem of old fraud. While scammers will find other ways to contact victims, millions of cryptocurrency users across the country will lose access to this critical financial infrastructure.
Instead, concerning regulators should encourage ATM operators to leverage proven fraud prevention technology to disrupt scammers and protect future victims from making mistakes. These tools offer a smarter approach. This protects consumers and maintains the exciting potential of cryptocurrency.
Opinion: Bill Repasky, lawyer for Frost Brown Todd LLP.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
