In early March, the US saw a massive and sudden drop in bitcoin ATMs with over 1,200 machines going offline.
This came just days after Illinois Senator Dick Durbin introduced a new bill to prevent fraud in the bitcoin ATM industry. The proposed “Crypto ATM Fraud Prevention Act” has operators and regulators worried about the future of these machines in the US.
According to Coin ATM Radar, the global Bitcoin ATM network lost more than 1,000 machines in early March. Of those, 1,233 were removed from the US market alone.
Related: Bitcoin ATM Scams on the Rise | Senators Call for Urgent Action
While other countries like Canada, Spain, Poland, Australia and Switzerland had new installations, the US decline was a major surprise.
Despite this reduction, the US still has the most bitcoin ATMs with 29,731 machines, which is almost 80% of the world’s total. Canada has 3,144, and Australia 1,457.
The timing of this massive decline suggests a connection to new regulatory scrutiny.
Senator Durbin’s Crypto ATM Fraud Prevention Act aims to prevent scams by requiring operators to warn users about scams, implement financial loss prevention measures, and give law enforcement better tools to track illegal transactions.
The bill was introduced after scams involving bitcoin ATMs surged, with criminals using the machines to steal money from unsuspecting victims. Senator Durbin said digital asset ATMs are being used by scammers and wants operators to be held accountable to protect the public.
The bill puts several new measures in place, including:
- Mandatory warnings on ATMs to inform users about scams.
- Stronger compliance requirements for operators to submit anti-fraud policies to FinCEN.
- Transaction limits for new users, $2,000 daily and $10,000 in 14 days.
- Refunds for fraud victims if they report losses within 30 days.
Transactions over $500 will require live verbal confirmation to ensure the user is aware of the risks. Fraudsters have used these machines to run different kinds of scams, including romance scams where victims are asked to send digital assets to fake online partners.
Impersonation scams were also employed in which criminals posed as government officials and demanded payment through digital asset ATMs. There were also reports of investment scams where scammers promise high returns for digital asset deposits.
According to the Federal Trade Commission (FTC), reported losses from bitcoin ATM scams jumped from $12 million in 2020 to $114 million in 2023. The FBI says older Americans are the primary victims, with thousands of complaints filed each year.
Digital asset ATM operators are being hit hard with intense regulatory pressure as the authorities crack down on unregistered businesses.
This isn’t just a U.S. issue—other countries are also taking action. In the UK, Olumide Osunkoya was just sentenced to 4 years in prison for running illegal digital asset ATMs for money laundering.
The Financial Conduct Authority (FCA) has since removed dozens of unregistered machines and warned consumers about the risks of using them.
The regulatory heat has many U.S.-based bitcoin ATM operators rethinking their business model. Some will comply with the new laws, others will shut down altogether, fearing the legal consequences.
