Congress Considers First Federal Regulations for Bitcoin ATMs #CriptoNews

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• Senator Durbin’s Crypto ATM Fraud Prevention Act aims to protect consumers from Bitcoin ATM scams
• Proposed limits include $2,000 daily cap and mandatory verification for transactions over $500
• Victims would qualify for refunds if fraud is reported within 30 days
• FTC reports crypto ATM scam losses exceeded $110 million in 2023
• Senior citizens face higher risk, being three times more likely to fall victim to these scams

Amid growing concerns over cryptocurrency scams targeting vulnerable Americans, Illinois Senator Dick Durbin unveiled legislation Tuesday aimed at regulating the rapidly expanding Bitcoin ATM industry. The Crypto ATM Fraud Prevention Act seeks to implement protective measures following alarming increases in reported fraud cases.

The bill, introduced February 25, 2025, comes in response to data showing Americans lost more than $110 million to crypto ATM scams in 2023 alone. This represents a nearly tenfold increase since 2020, according to Federal Trade Commission figures provided to NBC News.

“Bitcoin ATMs have become powerful tools for scammers,” Durbin said while introducing the legislation on the Senate floor. “These criminals prey on fear and confusion, leaving victims with empty wallets and no recourse.”

The proposed law would establish a $2,000 daily transaction limit for new users, along with a $10,000 cap for any 14-day period. Perhaps most crucially for potential victims, companies would be required to provide full refunds to users who report fraud within 30 days of their transaction.

FTC research indicates older Americans are disproportionately affected by these scams, with adults over 60 being three times more likely to fall victim compared to their younger counterparts. Emma Fletcher, senior data researcher at the FTC, has observed that “scammers are using these machines as a way to take money from people more than we’ve seen in the past.”

How The Scams Work

Many victims fall prey to what’s known as “impersonation scams,” where fraudsters pose as government officials, law enforcement, or financial institutions. A common tactic involves telling victims they’ve missed jury duty or face arrest unless they pay immediate fines through Bitcoin ATMs.

One such victim was a New Lenox resident who lost $15,000 after receiving a call from someone claiming to be a deputy sheriff. Believing he faced arrest for missing jury duty, the man followed instructions to deposit cash into a Bitcoin ATM as payment for supposed fines.

“There was no way to trace the transaction to the scammer and no way to get the money back,” Durbin explained.

Eric Reisman, a 67-year-old retired teacher from Baltimore County, shared a similar experience with NBC News. After losing $7,000 to a jury duty scam in January, he described feeling “hypnotized” during the ordeal, spending four and a half hours following a scammer’s instructions.

“If somebody had called me and asked what I was doing, that would have saved me,” Reisman said, highlighting how the bill’s requirement for operator verification on larger transactions might have prevented his loss.

The proposed legislation would mandate that operators speak directly with customers attempting transactions over $500 to verify legitimacy—a measure that consumer advocates believe could break the spell of high-pressure tactics used by scammers.

Industry Growth Outpaces Regulation

Bitcoin ATMs have multiplied across America in recent years, with nearly 30,000 machines now operating nationwide according to Coin ATM Radar. These kiosks, commonly found in gas stations and grocery stores, allow users to purchase cryptocurrency with cash.

The United States leads globally in Bitcoin ATM installations, with Canada (approximately 3,000 machines) and Australia (1,162 machines) following behind. Australia has experienced particularly rapid growth, jumping from just 73 machines in September 2022 to become the world’s fastest-growing market.

While many consumers use these ATMs for legitimate purposes, the regulatory framework has struggled to keep pace with industry expansion. Current practices among major operators typically include on-screen warnings about potential scams, but daily transaction limits often reach as high as $25,000—far above the $2,000 cap proposed in Durbin’s bill.

Some states have already implemented their own regulations. Minnesota, California, and Vermont have established daily transaction limits for Bitcoin ATMs. The federal legislation would defer to these state regulations when they are equally or more protective than the proposed federal standards.

Mixed Reactions From Industry and Advocates

The bill has garnered support from consumer protection groups like Americans for Financial Reform. Mark Hays, the organization’s associate director for cryptocurrency and financial technology, called the legislation a “good first step” toward addressing practices that enable fraud.

Industry response has been more measured. A spokesperson for CoinFlip, one of the nation’s largest Bitcoin ATM operators, emphasized that thousands use their kiosks daily for legitimate purposes. “We support legislation that includes strong protections for consumers, while preserving their right to access digital currencies,” the company stated.

Some industry observers have raised concerns about potential workarounds. Critics suggest scammers might simply direct victims to multiple ATM locations to circumvent transaction limits. If passed, enforcement would fall to the Treasury Department, which could impose fines of $10,000 per day for violations.

The legislation follows an inquiry led by Durbin last fall, when Democratic senators questioned the protective measures implemented by the country’s ten largest Bitcoin ATM operators. Their investigation revealed most companies set transaction limits far higher than the proposed caps and relied primarily on user acknowledgment of warning screens.

The push for Bitcoin ATM regulation comes amid broader concerns about cryptocurrency security. Earlier this year, Victoria Police in Australia dismantled an organized crime syndicate accused of stealing from six crypto ATMs across Melbourne. The operation resulted in four arrests and the seizure of approximately 50,000 AUD in stolen items.

In December 2024, major U.S.-based Bitcoin ATM company Byte Federal suffered a significant data breach affecting 58,000 customers. The breach, which went undetected for over a month, exposed personal information and highlighted vulnerabilities in the industry’s security practices.

These incidents occur as Bitcoin gains increasing institutional interest, with 18 states, including Illinois, proposing to establish Bitcoin Reserves. The expanding cryptocurrency landscape presents both opportunities and risks, underscoring the need for consumer protections.

As Bitcoin ATMs continue to proliferate in communities across America, Durbin’s legislation represents the most comprehensive federal effort to date to address fraud concerns. Whether the bill strikes the right balance between protecting consumers and preserving access to cryptocurrency services remains to be seen.