2025 Cryptocurrency ATM Regulation Review: Enforcement Actions, Fraud Cases, and Calls for Reform

Source: CryptoNewsNet Original Title: The Year in Bitcoin and Crypto ATMs 2025: Power Tools, Scams and Calls for Action Original Link:

Regulatory Pressure Mounts

In 2025, crypto ATMs faced unprecedented regulatory scrutiny as U.S. authorities and lawmakers attempted to address the growing problem of scams facilitated by these machines.

Some officials took direct action, using power tools to cut the machines, while two attorneys general filed lawsuits against several large companies in the industry. Meanwhile, relevant agencies and other entities issued consumer warnings targeting seniors.

Crypto ATM operators claim their machines provide valuable services, allowing anyone to purchase digital assets like Bitcoin with cash. However, critics argue that these companies could have done more to prevent scams targeting elderly Americans — even if it was detrimental to their business.

Scam Scale Expands

Last year, Americans reported $246 million in losses to the Internet Crime Complaint Center via crypto ATMs, a 99% increase from the previous year. About 43% of these losses involved Americans over 60.

The scams are fairly straightforward: elderly Americans withdraw cash from bank accounts, convert it into cryptocurrency using operators’ machines, and then send it to individuals impersonating government officials, businesses, or tech support.

Some variants are more creative, such as a scam in Massachusetts where residents lost money after being asked to pay in cryptocurrency to cover a so-called jury absence.

The irreversibility of crypto transactions makes it difficult for victims to recover funds after scammers disappear, and the detailed terms of service for these machines have become another potential obstacle in court.

For example, the Iowa Supreme Court this year ruled in two cases that a crypto ATM operator has the right to retain cash related to fraud because the company’s terms of service require users to claim they own a digital wallet to receive funds, not a third party.

Operator and Law Enforcement Confrontation

“Once the transaction is completed, when users insert cash and transfer cryptocurrency into their chosen wallet, our involvement in that transaction ends,” said Chris Ryan, Chief Legal Officer of Bitcoin Depot, in June.

Bitcoin Depot cooperates with local law enforcement to track victims’ cryptocurrency, but Ryan said authorities are creating more victims by cutting the company’s machines, with at least a dozen cases annually of property damage and cash loss.

Earlier that month, a spark flew when Jasper County sheriff cut into a Bitcoin Depot ATM at a rural gas station in Texas. Law enforcement recovered a total of $32,000 in cash, which Bitcoin Depot claimed actually belonged to them.

Legal Litigation and Regulatory Push

In Iowa, Bitcoin Depot and competitor CoinFlip face pressure from Attorney General Brenna Bird. In February, she sued both companies, alleging they profited from scam victims while charging “huge hidden transaction fees.”

Criticism of hidden fees was later echoed by Washington, D.C., Attorney General Brian L. Schwalb, who filed suit against crypto ATM operator Athena Bitcoin in September. In some cases, residents of the federal district paid undisclosed fees of up to 26%.

Schwalb’s lawsuit accuses Athena of exploiting the elderly and violating consumer protection laws, arguing that the warnings displayed on the company’s machines are unrelated to most victims’ experiences.

“Standing inside a gas station, terrified elderly scam victims clutching uncomfortable cash, not understanding what it means to ‘generate’ a crypto wallet or own their ‘personal Bitcoin wallet,’” the complaint states.

A spokesperson for Athena said the company strongly opposes these allegations and will defend itself in court. Bitcoin Depot and CoinFlip deny the allegations in Bird’s lawsuit, emphasizing procedures like ID checks and refund transaction fees to the media.

Federal Legislative Efforts

This year, Senator Dick Durbin (D-IL) introduced the Crypto ATM Fraud Prevention Act. The legislation would impose strict limits on crypto ATM transactions and require companies to provide full refunds to victims who report losses within a certain period.

Durbin said the legislation has “common-sense safeguards” to protect the elderly, but it has yet to make progress since being introduced in the Republican-led Senate in February.

State-Level Regulatory Progress

Although federal efforts to regulate crypto ATMs have seen little success this year, more than a dozen states have drafted or passed bills or regulations calling for restrictions on transactions, scam warnings, refund options, or new licensing requirements, according to AARP.

In June, the nonprofit organization dedicated to older Americans found that 20 states had taken measures to address the increasing number of scams facilitated by crypto ATMs, noting that it “continues to work with legislators in other states to adopt similar protective measures to prevent fraud involving crypto kiosks.”

At that time, Spokane, Washington, city council members had just passed a citywide ban on crypto ATMs, affecting about 50 machines locally.

A few months later, in August, Illinois became the first Midwestern state to pass a bill aimed at curbing crypto ATM-related scams, requiring operators to register with state regulators, cap transaction fees at 18%, and limit daily transaction amounts for new users to $2,500.

In the same month, the Financial Crimes Enforcement Network issued an emergency warning about crypto ATMs, stating that “the risk of illegal activity is heightened due to operators’ failure to comply with proper procedures under the Bank Secrecy Act.”

Global Scale and International Measures

As of mid-November, approximately 30,750 crypto ATMs have been installed in the United States, accounting for 78% of the world’s ATMs, according to Coin ATM Radar. Nonetheless, the total number of machines worldwide has hovered around 40,000 since 2022.

While U.S. local governments have imposed restrictions on crypto kiosks, some countries have adopted more comprehensive safeguards. For example, New Zealand banned these machines nationwide in June as part of efforts to curb criminal financing.