US States Move to Ban Crypto ATMs, Citing Role in Fraud

Some US states are increasingly moving to ban cryptocurrency kiosks, or ATMs, outright.

Cointelegraph reported on June 11 that the Delaware House Economic Development, Banking, Insurance & Commerce Committee sent a bill to the full House that would prohibit the installation and operation of crypto ATMs. State authorities are tightening oversight after concluding the machines are being used in phone scams and investment fraud.

A day earlier, the New Jersey Senate Commerce Committee unanimously approved a similar bill. Indiana, Tennessee and Minnesota have also passed bills calling for a full ban on crypto ATMs. Some local governments are also considering banning the machines or capping transaction amounts.

The Federal Bureau of Investigation said about 13,500 complaints related to crypto ATMs were filed this year. Losses exceeded $388 million, with the number of complaints up 23% from a year earlier and the amount lost rising 58%. More than half of the victims were age 50 or older.

Delaware Representative Cyndie Romer, who introduced the bill, said ordinary investors rarely use crypto ATMs, where fees can reach as high as 20%.

"There is no reason to support a business model that enables fraud targeting vulnerable people," Romer said.

The Delaware bill would also cover similar services that allow customers to buy crypto with cash, not just ATMs. If enacted, operators would have 90 days to remove crypto ATMs already in service. Violations would carry fines of up to $10,000.

The industry has pushed back. Bitcoin Depot, once the world's largest crypto ATM operator, recently cited regulatory pressure as a main reason for its bankruptcy filing. The industry argues that ATMs themselves are not the cause of fraud and says it has strengthened self-regulation through warning notices and transaction limits.