Congress Contemplates Implementing Initial Federal Regulations for Bitcoin ATMs

TLDR

Senator Durbin’s Crypto ATM Fraud Prevention Act is designed to safeguard consumers from Bitcoin ATM scams. The proposed legislation includes limits such as a $2,000 daily cap and mandatory verification for transactions exceeding $500. Victims who report fraud within 30 days would be eligible for refunds. The Federal Trade Commission reported losses of over $110 million to crypto ATM scams in 2023, with senior citizens facing a higher risk due to being three times more likely to be targeted.

In response to the rising concerns about cryptocurrency scams targeting vulnerable Americans, Illinois Senator Dick Durbin introduced legislation on regulating the expanding Bitcoin ATM industry. The Crypto ATM Fraud Prevention Act aims to implement protective measures following an alarming surge in reported fraud cases.

Introduced on February 25, 2025, the bill addresses the significant increase in Americans losing money to crypto ATM scams, reaching over $110 million in losses in 2023 alone. According to data from the Federal Trade Commission provided to NBC News, this represents a nearly tenfold rise since 2020.

Senator Durbin emphasized that Bitcoin ATMs have become tools for scammers who prey on fear and confusion, leaving victims empty-handed with no recourse.

If enacted, the proposed law would set a $2,000 daily transaction limit for new users and a $10,000 cap for any 14-day period. Moreover, companies would be required to offer full refunds to users reporting fraud within 30 days of the transaction.

Research from the FTC shows that older Americans, particularly those over 60, are disproportionately impacted by these scams, being three times more likely to fall victim compared to younger individuals. Emma Fletcher, a senior data researcher at the FTC, noted that scammers are increasingly exploiting these machines to defraud people.

How The Scams Work

Many victims are lured into “impersonation scams” where fraudsters pretend to be government officials, law enforcement, or financial institutions. A common tactic involves convincing victims that they missed jury duty or face arrest unless they immediately pay fines through Bitcoin ATMs.

One victim, a resident of New Lenox, lost $15,000 after a scammer posing as a deputy sheriff called and claimed he had missed jury duty, leading the victim to deposit cash into a Bitcoin ATM as supposed fine payment.

Durbin highlighted the challenge of tracing such transactions back to scammers and the difficulties victims face in recovering their money.

The bill also aims to mandate direct communication between operators and customers during transactions over $500 to verify legitimacy, potentially deterring scammers who use high-pressure tactics.

Industry Growth Outpaces Regulation

Bitcoin ATMs have proliferated in America, with nearly 30,000 machines operating nationwide, according to Coin ATM Radar. The U.S. leads globally in Bitcoin ATM installations, with Canada and Australia following. Australia’s market has seen rapid growth, expanding from 73 machines in September 2022 to become the world’s fastest-growing market.

While many use these ATMs legitimately, regulatory efforts have struggled to keep up with industry expansion. Current practices include on-screen scam warnings, but daily transaction limits often far exceed the $2,000 cap proposed in Durbin’s bill.

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

Mixed Reactions From Industry and Advocates

The bill has received support from consumer protection groups like Americans for Financial Reform, while industry response has been cautious. Operators, such as CoinFlip, agree on protecting consumers but emphasize the need to preserve access to digital currencies.

Some have raised concerns about potential loopholes in the proposed regulations. Critics warn that scammers might use multiple ATM locations to bypass transaction limits. The Treasury Department would enforce the bill, with fines of up to $10,000 per day for violations.

Durbin’s legislation follows an investigation last fall revealing that major Bitcoin ATM operators set transaction limits well above proposed caps and relied heavily on user acknowledgment of warning screens.

The push for Bitcoin ATM regulation coincides with broader concerns about cryptocurrency security, exemplified by recent criminal activities involving crypto ATMs. These incidents underscore the necessity of consumer protections amid the expanding cryptocurrency landscape.

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