Key Points
- US Senator Dick Durbin introduces a bill to regulate cryptocurrency ATMs and prevent scams.
- Consumer losses related to Bitcoin ATM scams have surged to $114 million since 2020, according to the FTC.
US Senator Dick Durbin introduced a bill on February 25, with the aim of combating scams associated with cryptocurrency ATMs. The proposed legislation, known as the Crypto ATM Fraud Prevention Act, puts forward stringent regulations for these machines, which have become tools for fraudsters exploiting innocent victims.
The bill proposes daily and fortnightly purchase limits at Bitcoin ATMs for new users. Transactions exceeding $500 would necessitate direct communication between the user and the company. If a user reports fraud and notifies the operator within 30 days, the company would be required to issue a full refund.
The Rising Issue of Bitcoin ATM Scams
Senator Durbin asserts that action is necessary as scammers are becoming more sophisticated with their use of technology. He revealed that criminals, particularly those targeting the elderly, are deceiving them into investing their money into these ATMs under false pretenses. He believes that this bill would help curb the effectiveness of such scams.
Data from the Federal Trade Commission (FTC) shows that consumer losses linked to Bitcoin ATM scams have alarmingly increased. Since 2020, financial losses from such scams have multiplied almost tenfold, reaching a staggering $114 million in 2023.
The rise in cryptocurrency popularity, particularly as the value of Bitcoin (BTC) nears $100,000, has led to a significant increase in scams. According to Chainalysis, a crypto market research firm, scam activity has been growing by approximately 2% annually.
Regulations and Reactions
The proposed legislation comes as consumer advocacy groups are increasingly calling for federal regulation of the industry. Several states, including Minnesota, California, and Vermont, have already enforced daily transaction limits on Bitcoin ATMs. The proposed measure stipulates that state laws would take precedence as long as they maintain or exceed federal standards.
The bill has garnered support from several financial reform groups, including Americans for Financial Reform. Mark Hays, the group’s associate director for cryptocurrency and financial technology, described the legislation as a “good first step” towards managing fraud in the industry.
If the bill is passed, the Treasury Department would have the authority to fine Bitcoin ATM operators $10,000 per day for each violation.
