New Regulations Proposed for Crypto ATMs by Illinois Senator
Illinois Senator Dick Durbin has unveiled a proposed legislative measure aimed at enforcing comprehensive new regulations on the nation’s cryptocurrency ATM sector. These machines have recently been scrutinized due to their involvement in scams, resulting in individuals losing significant amounts of money during single transactions.
Key Provisions of the Crypto ATM Fraud Prevention Act
The Crypto ATM Fraud Prevention Act seeks to impose restrictions on new users, limiting their cryptocurrency purchases to a maximum of $2,000 per day and capping total purchases at $10,000 over a 14-day timeframe. Additionally, the legislation mandates that companies engage directly with customers attempting to make transactions exceeding $500 and requires full refunds for users who report fraud to the police within 30 days of the transaction.
Senator Durbin’s Statement on Scams Targeting Seniors
Senator Durbin, who serves as the leading Democrat on the Senate Judiciary Committee, expressed concern about the evolving tactics of scammers, stating, “As our technology has evolved and become more sophisticated, so have scammers.” He highlighted that unscrupulous individuals are now employing intimidation and manipulation, particularly targeting vulnerable populations such as seniors, to coerce them into investing their life savings into crypto ATMs. Durbin believes the proposed legislation will help mitigate the effectiveness of these scams.
Recent Reports on Financial Losses from Bitcoin ATM Scams
In 2023 alone, the Federal Trade Commission reported over $114 million in losses resulting from scams associated with bitcoin ATMs. Advocacy groups and law enforcement officials emphasize that older adults are especially at risk of falling prey to these fraudulent schemes. Previous coverage has detailed how these scams have surged due to regulatory gaps, with some victims misled into believing they were facing legal consequences or owed fines for jury duty.
A Personal Account of Falling Victim to a Scam
Eric Reisman, a 67-year-old retired special education teacher, recounted his experience of being ensnared by a jury duty scam earlier this year. The Baltimore County resident reported losing $7,000 after paying a supposed fine via a bitcoin ATM. He admitted that he might have overlooked any warnings at the machine, explaining, “I was hypnotized, that’s the best I can say.” Reisman suggested that having a customer service representative intervene could have potentially saved him from making the costly mistake.
The Growing Presence of Crypto ATMs and Calls for Oversight
As cryptocurrency ATMs become more prevalent, appearing in various locations such as gas stations and grocery stores nationwide, consumer advocates have intensified their calls for federal oversight of the industry. Currently, at least three states—Minnesota, California, and Vermont—have implemented daily transaction limits for these machines. The proposed Senate bill allows for state regulations as long as they do not conflict with its stipulations or impose less strict measures.
Senate Inquiry into Crypto ATM Operators’ Fraud Prevention Measures
In the fall, Senator Durbin spearheaded an inquiry involving a group of Democratic senators, questioning how the ten largest bitcoin ATM operators in the U.S. are safeguarding elderly customers against scams. The companies indicated that they require users to acknowledge warnings about potential fraud and that most have set daily transaction limits around $25,000.
Industry Reactions to Proposed Legislation
NBC News reached out to several leading crypto ATM operators, including Bitcoin Depot, CoinFlip, and Athena Bitcoin, for their perspectives on Durbin’s proposed legislation. A spokesperson for CoinFlip remarked that their kiosks serve thousands of legitimate transactions daily, describing them as “critical” to the cryptocurrency ecosystem. They expressed support for legislation that ensures robust and consistent consumer protections while maintaining access to digital currencies. A representative from Bitcoin Depot declined to comment, and Athena Bitcoin did not respond immediately.
Concerns About Evasion of Regulations by Scammers
During discussions about similar regulations at the state level, some companies have raised concerns that scammers could easily circumvent these measures by directing victims to multiple locations. If the proposed bill is enacted, the Treasury Department would have the authority to impose daily fines of $10,000 on companies for ongoing violations.
Support from Consumer Advocacy Groups
Americans for Financial Reform, among other advocacy organizations, has endorsed the proposed legislation. Mark Hays, associate director for cryptocurrency and financial technology at the group, described the bill as a “good first step” in addressing practices within the cryptocurrency industry that have facilitated fraud. He cautioned, however, that while the legislation would not resolve all issues, it could significantly contribute to reducing scams.
