Bitcoin ATM’s days in America may be numbered

According to the FBI, $240 million was lost to cryptocurrency ATM scams in the first six months of 2025; This is nearly twice the pace of similar scams in 2024. The increasing pace of crypto ATM fraud has led some policymakers to pursue bans and others to ask why the country is covered in these machines.

Spokane Police Detective Tim Schwering began noticing an increase in crypto crimes in 2023. “Cases started flowing to me where people were scammed by cryptocurrency machines,” Schwering said. The money would go to China, Russia, Nigeria and other distant outposts. “You couldn’t reach anyone or get the money back,” Schwering said. People’s life savings in Spokane were wiped out.

Schwering said one man lost $900,000, all of which was deposited into the shady crypto ATM around the corner. At least two people lost their life savings and took their own lives in despair. These people were often elderly or lonely, falling prey to an overseas cryptocriminal posing as a romantic interest or taking advantage of a decline in cognitive function that makes people more easily frightened, Schwering said. In some cases, scammers posed as government agents threatening to unleash the full power of the IRS. But all of this would go away if victims went to a crypto machine and deposited $40,000.

The detective then began visiting nursing homes and other community venues to educate people about the dangers posed by fraudsters using crypto ATMs. “My job is to try to protect people and it’s very frustrating because criminals are often overseas and cannot be arrested safely. So at least we can change the policy,” Schwering said.

Biggest crypto ATM ban in the country

That’s when Spokane Councilman Paul Dillon took up the cause and advocated for a statewide ban, which initially fizzled in the legislature. “We wanted to see what levers we could leverage locally,” Dillon said. As Schwering continues to investigate crypto scams, Dillon proposed an ordinance banning crypto ATMs in the city. “We were motivated by compelling stories. There are ideological differences in our city council, but the ban passed unanimously and I’m proud of that,” Dillon said.

The decision was implemented in June and businesses are using additional time to remove machines.

The Spokane ban was one of the first in the nation, following a similar ordinance passed after a resident was defrauded in Stillwater, Minnesota. “We have not received any complaints about the removal,” Dillon said. He is hopeful that the legislature will pass a statewide ban in the next session (which starts Monday) and that the ban will prevent crypto ATMs from moving into neighboring municipalities.

Schwering said a federal ban — something Dillion found unrealistic given the Trump administration’s crypto regulatory stance — was the ultimate answer, noting that the city is just 20 minutes from the Idaho border. Meanwhile, many states across the political spectrum, including Arizona, Arkansas and Vermont, are tightening laws or considering additional restrictions on ATMs. St. Other cities, such as St. Paul, Minnesota, are considering outright bans similar to Spokane’s.

The problem spread across the country a new CNN report It’s about crypto scammers across the country using Circle K’s easy stories as a hub for this activity.

Strengthening the anti-fraud and surveillance state

Some experts, especially those working in the crypto industry, say getting rid of ATMs won’t eliminate fraud, and removing them altogether could have unintended consequences.

“Eliminating these could reduce some fraud vectors, but it also eliminates one of the last publicly available tools for financial privacy and cash-to-crypto conversion,” said Alex Davis, founder and CEO of Mavryk, a blockchain company focused on real-world asset tokenization. “The question is not whether crypto ATMs will exist; the question is whether society is comfortable with a future where every dollar must go through a fully surveilled, fully licensed gatekeeper.”

Davis said crypto ATMs persist not because they are the safest option, but because they solve a problem that the regulated financial system still has not: the accessible, private and frictionless movement of money. “Fraud is a real concern, but focusing solely on it misses the broader social dynamic. A significant portion of the population still operates in a cash-heavy or underbanked economy, and for them, a crypto ATM is often the only bridge to digital assets,” Davis said. he said.

High fees (often 10 percent or more) are not a feature of the technology, he says, but a premium charged for privacy and immediacy. “There is a segment of society that does not want every transaction to be audited or brokered,” Davis said, adding that traditional finance is increasingly shifting towards restrictive guardrails, increasing compliance friction and narrowing tolerance for anonymous economic activity. “Crypto ATMs fill the gap that banks no longer serve,” Davis said.

Jared Strasser, COO of The Crypto Company, a publicly traded blockchain and cryptocurrency firm, said crypto ATMs serve a very narrow audience, but they exist for the same reason unbanked ATMs have always existed: they serve people who need instant access to funds, often at a higher cost. Strasser said crypto ATMs are often people’s first point of contact with cryptocurrency. “Years ago in the United States, when there weren’t many options for switching to crypto, these machines served an important purpose. They were one of the only simple bridges between cash and digital assets,” Strasser said.

According to Strasser, the need for crypto ATMs has diminished domestically as many people who hold Bitcoin and other major cryptocurrencies do not use them in a cash equivalent way. People who view crypto as an investment asset class are much less likely to interact with ATMs. “This doesn’t negate the use case for others, but it explains why these machines serve a narrower, more transactional audience,” he said, adding that it’s that same transactional nature that makes them hubs for fraud.

“There’s no doubt that crypto ATMs have become a magnet for fraudsters, largely due to speed and irreversibility. But this risk does not mean the machines lack legitimate value,” he said, adding that the same pattern has been present for wire fraud, gift cards and traditional ATMs for decades.

A larger non-bank problem

Lev Breydo, an assistant law professor at the William & Mary Law School who studies the impact of technological change on market infrastructure and financial instruments, sees crypto ATM machines as a symptom of a larger problem. “High prevalence of BTMs [bitcoin teller machines] It says a lot about America, and none of it is particularly good. Simply put, BTMs reflect the intersection of people outside the mechanics of the financial system,” Breydo said.

These customers are forced to rely on check cashing and have lost trust in mainstream financial instruments in general, which is why they are turning to crypto. Breydo noted that the US is one of the few major markets that tolerates BTMs within a regulatory framework (others, such as the UK, have largely banned them). “This regulatory clarity has allowed BTMs to connect to the pre-existing ecosystem of check cashing stores, payday lenders, money transmitters, and independent ATM operators in the United States,” he said.

On the demand side, the US is a large market with a large unbanked population, a large remittance corridor, and relatively high crypto adoption. It’s this combination that explains why the United States has 80 percent of the world’s crypto ATMs. “In this sense, machines are less ‘innovation’ than a mirror of deeper structural failures in our financial system and safety net,” Breydo said.

Strasser said all licensed bitcoin ATMs in the United States must implement KYC (know your customer) and AML (anti-money laundering) procedures under the Bank Secrecy Act. According to Strasser, what is ultimately needed to eliminate abuse is sanctions and education, not removal. “While the fraud problem is real, their value is not inherently wiped out by this risk; this reflects the criminal exploitation of financial rails, not the purpose of the rails,” he said.

But in Spokane, Schwering will continue to tour businesses and if he finds a crypto ATM, he’ll start issuing citations. There are so many stories, according to Schwering, and sometimes people who get scammed don’t believe they’ve been scammed. The family tried to intervene in the case of an elderly woman who repeatedly sent money to a man abroad who started an online “romance” with her. He obtained a search warrant and traced the address to Nigeria. The woman’s family tried to intervene. But a year later (and nearly $250,000 later) he was still sending money. “There’s a part of it where it would be very painful to believe that it’s not real, and he doesn’t want to believe it either. Some people will continue to throw good money and bad money,” Schwering said.