Cryptocurrency ATMs promise to combine digital and real-world finance and increase the acceptance of tokens such as bitcoin. Instead, what drove them was fraud, bankruptcy and disappearing funds, according to lawmakers.
The anonymity offered by bitcoin and other blockchain-based tokens appeals to privacy-minded consumers. This feature also makes crypto a goldmine for fraudsters, however, and crypto ATMs play an important role.
Crypto ATMs are owned by private companies that provide technology on the virtual “ramp” between fiat money (aka regular money) and the blockchain. About 80% of the crypto ATMs in the world are about 30,000 in the US These physical kiosks are sometimes called ATM bitcoins, although some allow users to buy other tokens such as ethereum or stablecoins. People use cash or a debit card to buy crypto from these machines, some of which allow users to sell crypto stored in a digital wallet and get cash.
Many victims of fraud do not realize until it is too late that crypto ATMs are fundamentally different from their banking counterparts. Because they look like regular ATMs, people often think they are dealing with regular financial institutions – and are covered by the same regulatory framework that includes safeguards and consumer protections.
Crypto ATM scams are on the rise
This can be an expensive guess. The FBI reported a 58% year-over-year jump in crypto kiosk-related fraud losses; Last year, Americans lost $388 million in these scams. Officials noted that seniors, who may be more familiar with digital transactions, are more likely to be targeted by scams.
“Traditional bank transfers or credit card transactions have fraud prevention measures. These measures provide protection for customers or financial institutions to stop or reverse the transfer. This is not the case with bitcoin ATM transactions,” the Michigan consumer protection department wrote in a 2025 report on crypto ATMs.
Bitcoin ATMs operate outside of the traditional banking system, making them easy targets for fraud. “Scammers trick victims into using these ATMs to transfer funds directly to the fraudsters’ crypto wallets,” warned the California Department of Financial Protection and Innovation at a recent consumer forum on crypto ATM scams. “What is done cannot be undone and is often difficult for consumers to follow.”
Crypto ATMs have also come under fire with high fees and a lack of transparency in those fees. Users may not realize they are paying more than 20% of their transaction value in fees until the transaction is completed – and that money is gone. People who want to trade crypto for legitimate purposes can do so in a cost-effective way through a regulated exchange.
Because of this, the law makers have started demolition.
States are adding consumer warnings
Bitcoin Depot, which operated a network of 9,000 kiosks, filed for Chapter 11 bankruptcy on Monday. It was a sharp reversal of fortune for the company, at one time, the largest crypto ATM operator in North America. While the Trump administration has been supportive of crypto’s growing role in the financial system, the CEO of Bitcoin Depot blamed the company’s failure on a hostile regulatory environment.
This increased observation comes mainly from the states. So far, Indiana, Minnesota and Tennessee have banned crypto ATMs. Connecticut has suspended Bitcoin Depot’s business license. Many other states apply stricter regulations around crypto ATMs such as transaction caps.
Missouri Attorney General Catherine Hanaway called crypto ATMs “the new getaway vehicles for fraud” when she announced a lawsuit against another kiosk operator, CoinFlip, this week. (CoinFlip has denied the charges.)
Some states have advised citizens of the high risk of scams surrounding crypto ATMs. “Money sent through Bitcoin ATMs is nearly impossible to trace. This fact makes them an attractive option for criminals who commit fraud and money laundering,” Michigan regulators warned in a report last year. “They allow fraudsters to steal money quickly and anonymously.”
