Banning Virtual Currency Kiosks Is No Solution To Fraud

Opinion by: Bill Repasky, attorney at Frost Brown Todd LLP

With more than 55 million Americans now using cryptocurrency in their daily lives, cryptocurrencies have become an integral component of our nation’s financial system. 

Just like traditional ATMs, tens of thousands of virtual currency kiosks — also known as Bitcoin ATMs — have popped up in communities around the United States to support cryptocurrency transactions, from converting cash into crypto to buying and selling coins. The passage of the GENIUS Act may enlarge the public’s demand for Bitcoin ATMs as stablecoins are introduced.

Unfortunately, as with any new technology, scammers have learned how to use these tools to commit fraud. Hoping to protect residents, some localities have responded by banning these kiosks altogether. 

This isn’t a practical or effective solution — and it presents a real threat to all users and operators within the cryptocurrency ecosystem. 

Thankfully, there are better, proven ways to combat crypto scams that preserve this important financial infrastructure.

The rise of crypto ATM scams

Many crypto ATM scams involve persuasive criminals masquerading as authority figures, luring their victims into thinking they need to urgently hand over large sums of money via cryptocurrencies like Bitcoin to avoid jail or some other catastrophe. The FinCEN Notice of Aug. 4, 2025, FIN-2025-NTC1, explores common fraud schemes in detail. 

These scammers trick vulnerable people into converting fiat money into cryptocurrency at the kiosks, often directly into the scammer’s wallet — an action that is irreversible and often untraceable. 

When introducing the Crypto ATM Fraud Prevention Act, for example, Senator Dick Durbin relayed a story of a constituent who was tricked by a criminal impersonating law enforcement into making a $15,000 deposit at a crypto ATM. 

According to the FBI’s 2024 Internet Crime Report, there were more than 10,956 complaints of crypto ATM fraud totaling $246.7 million in losses last year — a 99% and 31% increase from 2023, respectively. While this is just a small component of the $12.5 billion consumers lost to financial fraud in 2024, it’s clearly a growing problem that needs to be addressed.  

The problem with blanket bans

Spokane, Washington made waves when it banned crypto ATMs completely, a move the city council claimed would help protect residents and prevent fraud. 

This strategy is much like banning email to eliminate phishing attempts…