Illinois Senator Dick Durbin has introduced the Crypto ATM Fraud Prevention Act, a bill aimed at curbing fraud in the rapidly growing cryptocurrency ATM industry. The legislation would impose strict transaction limits and enhanced consumer protections, responding to a rise in scams that disproportionately target elderly Americans.

According to NBC News, Durbin’s bill would:

• Cap new users at $2,000 in daily transactions and $10,000 over a 14-day period.
• Require ATM operators to directly communicate with first-time users attempting transactions over $500.
• Mandate full refunds for fraud victims who file police reports within 30 days.

With cryptocurrency ATMs now common in gas stations and grocery stores, their use in fraudulent schemes has become a major concern for law enforcement agencies.

The Growing Threat of Crypto ATM Fraud

Senator Durbin emphasized that scammers exploit crypto ATMs by pressuring victims into depositing large sums of cash under false pretenses.

“As our technology has evolved and become more sophisticated, so have scammers,” Durbin stated. “Nefarious actors are now using intimidation and manipulation to scare Americans, particularly seniors, into dumping their life savings into cryptocurrency ATMs.”

The Federal Trade Commission (FTC) reported that in 2023 alone, scams involving cryptocurrency ATMs resulted in $114 million in losses.

Fraudsters commonly pose as government officials or law enforcement officers, coercing victims into making payments under the threat of legal action. In one case, a Springfield, Illinois store owner removed a crypto ATM after noticing multiple elderly customers depositing large sums while speaking on their phones, seemingly under duress.

How the Bill Would Strengthen Consumer Protection

Durbin’s proposed legislation is designed to introduce greater accountability for ATM operators by requiring:

• State regulations to remain in effect, as long as they are not weaker than federal rules.
• ATM companies to submit fraud prevention policies to the Financial Crimes Enforcement Network (FinCEN).
• Violators of the regulations to face fines of $10,000 per day.

Several states, including Minnesota, California, and Vermont, have already implemented daily transaction limits on crypto ATMs to combat fraud. Durbin’s bill would set a nationwide standard while allowing states to enforce stricter rules if necessary.

Industry Response and Future Implications

https://x.com/SenatorDurbin/status/1894415557761372410

With cryptocurrency adoption expanding, crypto ATMs play a key role in bringing digital assets to mainstream users. However, the lack of regulation has led to increased risks, prompting lawmakers to act.

While consumer advocates support stronger protections, some crypto enthusiasts fear overregulation could stifle innovation and limit accessibility to digital assets. If the bill passes, it could reshape the crypto ATM landscape, introducing stricter oversight and compliance measures for operators nationwide.

As the debate continues, one thing remains clear: crypto ATM fraud is a growing problem, and regulators are taking notice.