In late February, Illinois Senator Dick Durbin introduced the Crypto ATM Fraud Prevention Act, raising alarms about scams and illegal activities linked to cryptocurrency ATMs. His initiative came after a local constituent reported falling victim to fraud, underscoring the need for stronger protections in the sector.
Coinciding with the introduction of this bill, more than 1,200 crypto ATMs across the United States were suddenly taken offline during the first weekend of March. This move added to concerns surrounding the rising risks associated with these machines.
The proposed legislation aims to introduce tighter regulations on crypto ATM operators. Among its key provisions, the bill would require operators to display scam warnings, improve fraud prevention systems, and offer law enforcement the necessary tools to track suspicious transactions.
Although the U.S. saw the most significant impact, with a net loss of over 1,100 crypto ATMs worldwide, new installations in countries like Europe, Canada, Spain, Poland, Australia, and Switzerland helped slightly mitigate the global decline. Despite these losses, 860 new crypto ATMs were set up across the U.S. in February.
If the Crypto ATM Fraud Prevention Act is passed, it would impose a $2,000 daily spending limit on new users of Bitcoin ATMs and require a two-week waiting period for withdrawals of $10,000. The bill would also mandate that users transacting over $500 must communicate directly with operators, and if they report fraud to the authorities within 30 days, they would be eligible for a full refund. Additionally, customers would be entitled to a refund for any fees associated with fraudulent transactions.
Despite the recent setbacks, the U.S. remains the leader in the crypto ATM market, hosting 29,731 machines, making up nearly 80% of the global total. Canada follows with 3,085 ATMs (8.3%), while Australia ranks third with 1,467 machines (3.9%).
Since mid-2022, growth in the crypto ATM industry has slowed due to changing regulations and increased scrutiny of unregistered operators.
In response to the rise in fraud, U.S. Senate Democrats, including Senator Durbin, have previously urged major crypto ATM operators to take immediate action. Last year, a group of senators, including Elizabeth Warren, called on the largest crypto ATM companies to address the growing concerns about fraud targeting elderly Americans, who are particularly vulnerable to Bitcoin ATM scams.
The senators highlighted that individuals aged 60 and older are more than three times as likely to fall victim to scams related to Bitcoin ATMs compared to younger individuals. Letters were sent to the CEOs of prominent Bitcoin ATM companies like Bitcoin Depot, CoinFlip, RockItCoin, and others, urging them to take swift action against these fraudulent activities.
