Massachusetts City Weighs Crypto ATM Ban to Combat Financial Fraud

Cryptocurrency ATMs let customers convert cash into digital assets without using an online exchange, but fraudsters increasingly exploit the machines by directing victims to wallets they control. The Federal Bureau of Investigation said Hawaii consumers reported $3.85 million in crypto-kiosk fraud losses in 2025, nearly four times the 2024 amount, with older residents accounting for most losses. The surge has pushed US states toward transaction caps, refunds, warnings and outright bans.

Governor Josh Green signed HB 1642 on July 9, 2026, making it Act 224. From Oct. 1, operators may not own, operate or manage a kiosk in Hawaii that accepts US currency in exchange for a digital financial asset, with each prohibited transaction treated as a separate offense. The law does not bar machines from converting cryptocurrency into cash or another digital asset. Hawaii is the first state to ban deposit-taking crypto kiosks; four other states have banned the machines outright.

Cryptocurrency ATMs let users convert cash into digital assets within minutes, but their speed and the difficulty of reversing blockchain transfers have made them a favored payment channel for impersonation, romance and family-emergency scams. Minnesota regulators said earlier safeguards, including transaction limits and warnings, were being circumvented as fraudsters coached victims through deposits. Older residents have been hit particularly hard, prompting the state to replace regulation with an outright ban.

Minnesota’s Chapter 65 took effect on Aug. 1, 2026, barring the installation, operation, maintenance or public availability of virtual currency kiosks. Operators must take machines offline and remove them from public locations by Dec. 31. The Minnesota Department of Commerce recorded 134 kiosk-scam complaints from 2023 through 2025, with reported losses nearing $1 million; 70 cases and more than $540,000 of losses occurred in 2025 alone. State figures put overall digital-asset fraud losses in 2025 at $151 million.

Cryptocurrency kiosks allow customers to convert cash into digital assets, but scammers have increasingly used them to steer victims into transfers that can be difficult to reverse. The scale of losses in Texas, the highest among U.S. states, has intensified scrutiny of whether consumer safeguards are sufficient and whether the machines should remain legal.

Texans lost $56.8 million to cryptocurrency ATM scams in 2025, or nearly $57 million, according to the latest report. With related losses rising sharply nationwide, a Texas legislative committee is considering tighter regulation or an outright ban. Indiana, Tennessee and Minnesota have already prohibited Bitcoin ATMs.

Cryptocurrency ATMs allow people to use cash to buy virtual assets and send them to designated wallets. But because the transactions are irreversible and fund flows are difficult to trace, the machines are frequently exploited in government-impersonation, investment and elder-fraud schemes. The Federal Bureau of Investigation recorded $333 million in losses from related scams in 2025, prompting states to tighten regulation.

Tennessee Governor Bill Lee signed HB 2505 on April 13, 2026, with the law taking effect on July 1 and making Tennessee the second U.S. state after Indiana to impose a comprehensive ban on the machines. Installing, hosting or operating one constitutes a Class A misdemeanor. The state had about 185 machines before the law took effect, and a federal court rejected a request from operators including CoinFlip to block its enforcement.

Crypto ATMs allow people to quickly buy and sell digital assets with cash, but transactions are difficult to reverse and scammers often use the machines to induce victims to transfer funds. Delaware and New Jersey are therefore considering a tougher approach than transaction limits, cooling-off periods and identity checks: a complete ban on installing and operating the machines to reduce financial fraud risks.

Legislative committees in Delaware and New Jersey recently approved bills banning crypto ATMs, moving them to the next stages of the legislative process. If the measures clear their remaining reviews and take effect, installing or operating such machines would be prohibited in both states. One basis for the legislation is FBI data showing that losses from related scams reached $388 million in 2025.

Cryptocurrency kiosks allow users to quickly convert cash into Bitcoin and other assets, but funds sent to a scammer's wallet are usually difficult to trace or recover. The Minnesota Department of Commerce said scammers were still circumventing a $2,000 daily transaction limit for new customers and a refund mechanism introduced in 2024 by splitting transactions and using existing accounts.

House File 3642, introduced by state Representative Erin Koegel, has now been enacted rather than remaining merely under consideration. Minnesota received 134 related complaints from 2023 through 2025, with reported losses totaling nearly $1 million. The ban will take effect on August 1, 2026, and operators must remove kiosks from public locations by December 31.