Wisconsin Democrats Propose Regulations for Cryptocurrency ATMs to Combat Fraud
In Wisconsin, Democratic lawmakers are advocating for new regulations targeting cryptocurrency ATMs, motivated by a rise in fraudulent activities associated with these machines. The increasing prevalence of scams involving crypto ATMs has drawn the attention of fraud prevention specialists, who note that these devices are not governed by the same rules that apply to traditional banking ATMs, leaving victims without insurance protections.
Surge in Cryptocurrency ATM Fraud
According to Scott Reeder, a loss prevention manager at UW Credit Union, the lack of recovery options makes it particularly challenging for victims to reclaim lost funds. “You can file police reports, but they often lead to a dead end. With the volume of incidents rising, there simply aren’t enough resources to investigate these cases,” he explained. The FBI reported that nearly $247 million was lost to scams involving cryptocurrency ATMs last year, with complaints regarding these machines nearly doubling in 2024.
Growing Concern Over Scams
Reeder noted a significant increase in scam reports over recent years, stating, “Five years ago, we seldom heard about these cases, but they have been steadily rising in frequency.” A West Allis resident, identified only as Amy for privacy reasons, recently fell victim to a scam involving a cryptocurrency ATM, losing $850. She received a call from an individual posing as a police officer, who insisted that she had a warrant for her arrest due to a missed court appearance.
A Misleading Encounter
Believing that her elderly mother might have misplaced a court summons, Amy was convinced by the scammer’s claims. “When he mentioned a signature I couldn’t recognize, I thought it was my mom’s,” she recalled. As she sought to clarify the situation, the scammer maintained pressure, stating, “We don’t have to do this the civil way. You can turn yourself in downtown.”
False Documentation and Urgent Demands
The scammer provided her with fake court documents and suggested that she could resolve the issue by paying certain fees. To avoid arrest, he instructed her to withdraw funds from a nearby cryptocurrency ATM. “I had no knowledge about Bitcoins,” Amy said. After she made the transaction, the scammer demanded additional money, leading to her realization that she had been duped.
Proposed Legislative Measures
In response to the growing concern, State Rep. Ryan Spaude and Sen. Kelda Roys, both Democrats, have introduced a bill that would mandate cryptocurrency ATMs to alert users about potential fraud, limit daily deposits to $1,000, and require operators to reimburse customers who fall victim to scams. “Implementing these measures could significantly reduce the likelihood of criminals exploiting your devices for fraud,” stated Spaude.
Seeking Bipartisan Support
Roys emphasized the necessity of taking action to protect Wisconsin residents, saying, “Cryptocurrency is here to stay, and we must act to prevent our citizens from being victimized.” However, the proposal faces challenges as Republicans hold the majority in the Wisconsin Legislature, and its passage depends on gaining their support. The sponsors are actively seeking co-sponsors in hopes of achieving bipartisan backing for these essential regulations.
Advice for Consumers
Meanwhile, Reeder advises individuals to be cautious before sending money to unfamiliar parties, especially when under pressure. “If anything seems off, take a moment to pause. Seek advice from your financial institution and ask, ‘Does this seem legitimate?’” he recommended.
