Illinois Sen. Dick Durbin announced legislation Tuesday that would institute sweeping new regulations for the nation’s crypto ATM industry.
The machines have come under increasing scrutiny as the kiosks are used for scams where victims have — in a single visit.
The Crypto ATM Fraud Prevention Act would prevent new users from spending more than $2,000 in a day or $10,000 over a 14-day period to purchase cryptocurrency at a bitcoin ATM. The bill would also require companies to speak directly with new customers seeking to make transactions over $500 and mandate full refunds when those users file a police report and alert operators within 30 days of their transaction.
“As our technology has evolved and become more sophisticated, so have scammers,” Durbin, the top Democrat on the Senate Judiciary Committee, said in a statement. “Nefarious actors are now using intimidation and manipulation to scare Americans, particularly seniors, into dumping their life savings into cryptocurrency ATMs.” The bill, he said, would “help curb the efficacy of these scams.”
At least $114 million in losses from scams involving bitcoin ATMs were Advocates and law enforcement say older adults are particularly vulnerable to such crimes.
NBC News has on the scams, which have proliferated in the wake of regulatory gaps. Some victims have been falsely led to believe they were facing arrest or owed fines for missing jury duty.
Eric Reisman, a 67-year-old retired special education teacher, said he fell for a jury duty scam in January. The Baltimore County resident said he lost $7,000 after paying the supposed fine by feeding bills into a bitcoin ATM. It’s possible, he said, that there was a warning at the machine that he skipped past.
“I was hypnotized, that’s the best I can say,” Reisman said. “Why would I have spent four and half hours on this thing and not woken up?”
Having an interaction with a customer service representative might have helped break the spell, he said.
“If somebody called me and said, ‘Wait a second, what are you doing? Why are you putting in so much money, and do you have more money you’re going to put in?’ that would have saved me as well,” Reisman said.
The Senate bill comes as the kiosks have become more accessible, popping up in gas stations and grocery stores in communities across the United States.
Consumer watchdogs have pushed for federal oversight of the industry. At least three states — Minnesota, California and Vermont — already have daily transaction limits for bitcoin ATMs. The Senate bill says it will defer to state regulations, provided they are not in conflict or less stringent.
In the fall, Durbin led an inquiry from a group of Democratic senators 10 largest bitcoin ATM operators were protecting elderly users from scams.
The companies said they required users to acknowledge warnings about potential fraud and most set daily transaction limits around $25,000.
NBC News reached out to three crypto ATM operators — Bitcoin Depot, CoinFlip and Athena Bitcoin — for comment on Durbin’s legislation. These companies operate the most bitcoin ATMs in the U.S., a website that tracks them.
A spokesperson for CoinFlip said in a statement that the kiosks are used by thousands daily for “legitimate transactions,” calling them “critical” to the cryptocurrency sphere.
“We support legislation that includes strong and consistent protections for consumers, while preserving their right to access digital currencies, and we look forward to working with Sen. Durbin on this important issue,” the statement read.
A spokesperson for Bitcoin Depot declined to comment. Athena Bitcoin did not immediately respond.
When similar regulations have been , some companies they might still be evaded if scammers simply directed victims to go to more than one site.
If the bill passes, the Treasury Department could fine companies $10,000 for each day violations persist.
Americans for Financial Reform is one of several watchdog groups that have endorsed the legislation. Mark Hays, its associate director for cryptocurrency and financial technology, says the legislation as a “good first step” in tackling practices within the crypto industry that have allowed fraud to flourish.
“This bill won’t solve all those problems,” he said, “but it can help.”
