Key Takeaways:
- Sen. Dick Durbin introduced the Crypto ATM Fraud Prevention Act to prevent increased scams at ATMs for cryptocurrencies.
- The bill includes transaction caps and mandatory rebates, especially for first-time users and victims of scams and fraud.
- This legislation seeks to protect vulnerable populations in our society, particularly older adults, from losing their livelihoods to fraudulent individuals.
US Senator Dick Durbin Proposes Legislation to Combat Crypto ATM Fraud
The Senate introduced the Crypto ATM Fraud Prevention Act in response to the alarming rise in fraud via Crypto ATMs. Illinois Senator Dick Durbin recently proposed this legislation to combat rising fraud cases involving cryptocurrency ATMs. This law aims to provide “common sense guardrails” to help prevent people, especially the elderly, from being victims of scams taking advantage of the function of irreversible and anonymous crypto transactions. The senator, a Democratic former Senate Judiciary Committee chairman, made the announcement on the Senate floor while speaking about a troubling case involving one of his constituents.
I’m on the Senate floor announcing new legislation—my Crypto ATM Fraud Prevention Act—to help stop fraud at crypto ATMs. Watch. https://t.co/JZqjfYkhat
— Senator Dick Durbin (@SenatorDurbin) February 25, 2025
A Scam Too Close to Home: The Case That Spurred Action
Senator Durbin recounted hearing from a constituent who was swindled out of $15,000. A scammer impersonating a law enforcement officer falsely told a victim that there was a warrant for their arrest and instructed them to deposit money into a crypto ATM to avoid jail time. This anecdote in turn illustrated the “alarming trend of crypto ATM fraud” that led to the legislation in the first place.
Crypto ATM Fraud Prevention Act: Provisions of the Bill
The proposed legislation introduces multiple measures to combat fraud in crypto ATMs. Its most significant provisions include:
- Transaction Limits: Users would be restricted from spending more than $2,000 per day or $10,000 over a 14-day period.
- Verbal Confirmation from New Customers: Crypto ATM companies would have to confirm any deposit over $500 verbally from new customers.
- Mandatory Refunds: The legislation enforces compulsory refunds to fraud victims as long as they file a police report and notify the ATM operator within 30 days of the transaction.
- Fraud Prevention Policies: For the first time, operators will need to have in place fraud prevention policies and to file them with the Financial Crimes Enforcement Network (FinCEN).
- Period of “Special Protection”: For all first-time crypto ATM users, there would be a two-week period of “special protection.”
Crypto ATM Scams Are a $114 Million Problem and Growing
The alarming statistics regarding crypto ATM fraud underscore the urgent need for such legislation. In 2023, Americans lost over $5 billion through crypto fraud — scams involving crypto ATMs are responsible for a huge amount of those losses, according to the Federal Trade Commission (FTC). At least $114 million in losses from scams tied to bitcoin ATMs were reported to the Federal Trade Commission in 2023, a number that is driving consumer watchdogs to call for federal oversight of the industry. Many of these schemes target older adults, who are among the most vulnerable to fraud.
A Familiar Scam, A New Medium
The exploit described by Senator Durbin is, at its core, a twist on tactics that criminals have used for years. Normally, these scams include calling people and threatening them with fictitious legal action if they don’t buy gift cards and provide their redemption codes. But criminal activity is increasingly being carried out in the new, anonymous, decentralized environment enabled by cryptocurrency.
Sen. Dick Durbin, D-Ill., said his legislation would ‘help curb the efficacy’ of crypto ATM scams.
The Regulatory Landscape: A Patchwork of State Laws
As of now, the regulatory framework for crypto ATMs is a patchwork of state regulations. Three states — Minnesota, California and Vermont — already have bitcoin ATMs with daily transaction limits. Durbin’s legislation seeks to establish a more uniform national standard but would defer to state regulations as long as they don’t conflict with or weaken the federal rules. This allows consumer protections tailored to the needs of individual communities, while achieving an important minimum level of consumer protection throughout the country.
Industry reaction: Mixed Responses
NBC News contacted three of the largest crypto ATM operators in the U.S. — Bitcoin Depot, CoinFlip and Athena Bitcoin — for comment on the Durbin legislation. CoinFlip released the following statement: “CoinFlip supports any legislation that includes strong, consistent consumer protections but does not take away the right of consumers to access digital currencies. Bitcoin Depot did not immediately respond to a request for comment, and Athena Bitcoin did not have an immediate comment.
The Problem With Enforcement and Evasion
While the proposed regulations aim to address these issues, enforcement challenges remain a significant concern. It’s also been pointed out by some ATM operators that scammers are easily able to direct victims to visit multiple ATM locations in order to bypass any transaction limits. Scammers’ ability to bypass transaction limits by directing victims to multiple ATMs underscores the need for stronger enforcement and continuous monitoring.
Penalties for Non-Compliance: A Daily Fine of $10,000
While the proposed regulations aim to address these issues, enforcing transaction limits and monitoring ATM activity effectively remain significant challenges. The Treasury Department could impose a $10,000 daily fine on crypto ATM operators that fail to comply with the regulations. By implementing such strict penalties, the bill encourages ATM operators to adopt best practices that protect consumers and prevent fraud.
Consumer Watchdogs Are Among Supporters: A Good First Step
Consumer watchdog groups, including Americans for Financial Reform, have backed the legislation as a “good first step” toward addressing practices in the crypto industry that have paved the way for fraud to flourish. While they acknowledge that the bill won’t fix everything, these groups argue that it could offer much-needed protections for vulnerable consumers.
Technological Tools in the Fight Against Fraud
Authorities are using blockchain analytics and real-time monitoring systems to track suspicious transactions and trace funds. These tools, created by cybersecurity and crypto analysis companies, help identify irregular patterns, and can assist in providing essential leads for law enforcement investigations.
Local Law Enforcement: A Need for Specialized Training
Many officers still know little about specific cryptocurrency transactions or recovery options, so local law enforcement agencies need specialized training to respond effectively when victims report these crimes.
More News: Republican Senator Bill Hagerty Introduces The GENIUS Act to Regulate Stablecoins
Public Education: The Key to Avoiding Fraud
Effective fraud prevention relies on a partnership involving government regulations, industry responsibility, and consumer awareness to create multiple layers of protection against sophisticated schemes. Educating vulnerable populations to recognize and avoid crypto scams increases public awareness, and is equally important.
The Long Path Forward: Will the Bill Get Through Congress?
The senator’s legislation is among the first crypto-focused legislation to come to Congress during the 119th session. But the fate of it is still up in the air. It is not clear whether any Democrat-recommended legislation would have enough backing to clear the Republican-controlled Congress and be signed into law by President Donald Trump. Nevertheless, the passing of this bill is a crucial measure towards combating the surging issue of crypto ATM scams and safeguarding at-risk consumers.
Legislative Action: Turning Proposals into Law
Due to the borderless nature of digital assets, many countries are implementing similar policies—such as transaction limits and strict compliance measures—to regulate cryptocurrency ATMs and reduce fraud. We should expect enhanced collaboration globally, unifying standards and reducing fraud while creating a stronger international architecture for digital finance.
The post Senator Durbin Introduces New Bill to Combat Crypto ATM Fraud appeared first on CryptoNinjas.
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