Cryptocurrency ATMs are now a common sight at gas stations and grocery stores across the U.S. While they provide convenient access to digital currency, they have also become a tool for scammers—especially targeting older adults. Illinois Senator Dick Durbin has proposed the Crypto ATM Fraud Prevention Act to combat fraud and enhance consumer protection.
The bill proposes new transaction limits to prevent large-scale scams. If passed, new users would be restricted to spending $2,000 per day and $10,000 over 14 days at crypto ATMs. Additionally, companies would be required to speak directly with new users attempting to conduct transactions over $500 to ensure they understand potential risks.
Another major provision is mandatory refunds. If a victim reports a scam to law enforcement within 30 days, ATM operators would be required to fully reimburse the lost funds. These measures aim to curb financial losses from fraudulent schemes that often involve coercion and intimidation.
According to the Federal Trade Commission (FTC), bitcoin ATM scams resulted in losses exceeding $114 million in 2023. Many victims are tricked into making large deposits under false threats of arrest or unpaid fines.
For example, retired teacher Eric Reisman lost $7,000 in a jury duty scam after being instructed to deposit money into a bitcoin ATM. Looking back, he believes that a customer service representative’s intervention could have saved him.
“As our technology has evolved and become more sophisticated, so have scammers,” Durbin said. He emphasized that the bill is designed to protect vulnerable Americans, particularly seniors.
Some states like Minnesota, California, and Vermont already have daily transaction limits for crypto ATMs. However, federal oversight remains minimal. Durbin’s bill would not override stricter state regulations but would establish a nationwide framework to enhance security.
Consumer watchdog groups, such as Americans for Financial Reform, support the bill as a necessary step toward preventing fraud. However, some experts warn that scammers may try to bypass limits by sending victims to multiple ATMs.
Crypto ATM companies have responded differently to the proposal. CoinFlip, a major operator, supports consumer protections but emphasizes that many users rely on ATMs for legitimate transactions. Meanwhile, Bitcoin Depot declined to comment, and Athena Bitcoin did not respond.
If passed, the bill would allow the Treasury Department to fine companies $10,000 per day for violations. This could push operators to tighten security, implement fraud detection alerts, and improve identity verification.
While the Crypto ATM Fraud Prevention Act won’t eliminate scams entirely, it marks a significant step toward protecting consumers. By implementing transaction limits, fraud warnings, and refund policies, the bill aims to reduce the effectiveness of scams that have cost Americans millions.
As cryptocurrency adoption grows, ensuring that security measures keep pace with innovation will be crucial. Whether this bill will pass remains to be seen, but it has already sparked a much-needed conversation about regulating digital finance while maintaining accessibility.
It is likely that at an appropriate time, industry actors like Marathon Digital Holdings Inc. (NASDAQ: MARA) will be called upon to provide input when the draft law reaches a public comment stage. At this point, any gaps in the current proposal could be pointed out.
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