Banning virtual currency kiosks is no solution to fraud

With over 55 million Americans using crypto daily, it's a core part of our financial system. Tens of thousands of Bitcoin ATMs are popping up everywhere, and the GENIUS Act might boost demand even more with stablecoins. But scammers are exploiting these kiosks for fraud, leading some cities to ban them outright. This is a lazy fix that hurts legit users and doesn't stop the real problem.

Scammers pose as authority figures, tricking victims into urgent crypto payments to avoid fake disasters. Per FinCEN's 2025 notice, they lure people to convert cash into crypto at kiosks, sending it straight to scammer wallets—irreversible and often untraceable. Senator Dick Durbin shared a story of a $15,000 scam where a criminal impersonated law enforcement. FBI's 2024 report shows over 10,956 crypto ATM fraud complaints totaling $246.7 million in losses, up 99% and 31% from 2023. It's a small slice of the $12.5 billion total fraud losses in 2024, but it's growing fast.

Spokane, Washington banned crypto ATMs, claiming it protects residents. But this is like banning email to stop phishing or blocking gift cards to prevent scams. Fraud exploits human weaknesses, not tech. Banning ATMs just pushes victims to other methods, punishing millions of users who rely on this infrastructure.

Intercept scams at the transaction point with warnings: don't deal with fake law enforcement, crypto is irreversible and untraceable. Tailor alerts based on user behavior. This works for other frauds like wire transfers. Reputable operators are already on it. State regulators can enforce licensure with fraud prevention rules, pushing operators to compete on safety. Grosse Pointe Farms, Michigan preemptively set registration and warning rules for crypto ATMs, even without any yet, to boost transparency and protect residents from scams.

Blanket bans won't stop fraud; scammers will adapt, but users lose access. Regulators should push for smart fraud prevention at ATMs to block scams and protect victims. This approach saves crypto's potential while keeping people safe.

Opinion by Bill Repasky, attorney at Frost Brown Todd LLP. This is for info only, not legal or investment advice. Views are the author's alone, not Cointelegraph's.