Wisconsin lawmakers have introduced legislation to crack down on cryptocurrency ATM fraud, targeting machines that criminals increasingly exploit to steal money from unsuspecting victims. The bills would require operators to obtain licenses, verify user identities, and cap the high fees these machines typically charge.
Senator Kelda Roys and six Democratic colleagues filed Senate Bill 386 on Monday in the Wisconsin State Legislature. It matches the Assembly Bill 384 that Representative Ryan Spaude introduced in the Wisconsin State Assembly in July. This dual approach speeds up the legislative process by allowing both chambers to consider the measures simultaneously.
The legislation responds to warnings from federal authorities about crypto ATM abuse. The Treasury’s Financial Crimes Enforcement Network recently identified fraud, cybercrime, and drug trafficking as the three main crimes conducted through these machines. Officials say criminals particularly target elderly victims by posing as bank employees or tech support representatives.
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Essential Requirements for Operators to Protect Customer Interests
Under the proposed bills, crypto ATM operators must obtain money transmitting licenses to operate in Wisconsin. They must collect customer information, including names, dates of birth, addresses, and email addresses for every transaction.
Operators must photograph customers and verify their identity using government-issued documents like driver’s licenses or passports. As per the bill, $1,000 worth of daily transactions is the limit users have. This will help reduce large-scale fraud.
Machines must display fraud warnings “within the customer’s field of vision” to alert users about potential scams before they complete transactions.
The legislation addresses investor concerns about excessive fees that crypto ATMs charge compared to online exchanges. The bills would cap fees at either $5 flat rate or 3% of the transaction value, whichever is higher.
Operators must fully reimburse customers for fraudulent transactions if law enforcement confirms the fraud within 30 days. This provision protects investors who fall victim to scammers using these machines.
The Legislation Joins a Global Push to Protect Crypto Users
Wisconsin joins a worldwide movement to regulate crypto ATMs, which are not so uncommon. New Zealand banned these machines entirely in July, citing money laundering issues. British regulators seized seven crypto ATMs and arrested two operators in London for alleged money laundering and illegal exchange operations. In July, Tasmania Police Cyber Investigations revealed that the top 15 users of cryptocurrency ATMs across the state were victims of sophisticated scams, with collective losses amounting to $1.6 million.
Even Michigan communities without crypto ATMs have passed preventive regulations, showing how widespread the concern has become among local officials.
The Wisconsin bills face legislative debate and potential amendments before becoming law. Success will depend on effective implementation and enforcement as the cryptocurrency market continues evolving.
