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New rules mean that virtual currency kiosks, or BTMs, must implement a range of anti-fraud measures to operate in the US state of Wisconsin, in a sign that lawmakers are focusing on fraud in this area.
Providers will have until September 25, 2025 to apply the new rules, which were issued in regulatory guidance published on May 28 by the Wisconsin Department of Financial Institutions - Division of Banking (DFI).
The regulations include daily transaction limits of $2,000 per customer, a requirement to affix conspicuous fraud warnings on machines, and the obligation to adhere to anti-fraud procedures.
The measures are part of a package of policies to tackle cryptofraud in the state, including Wisconsin’s Money Transmission Law, which came into force on January 1, 2025 .
The Money Transmission Law restricts transmission of the sender's money if the operator suspects fraud, requires BTM operators comply with Banking Secrecy Act reporting, and authorises the DFI to deny, suspend or revoke licences for fraud.
Crypto scams rising
Wisconsin lawmakers were prompted to institute the rules by the rise in cryptocurrency scams – according to the guidance, such activity accounted for nearly half of the total financial losses from financial fraud complaints received by the FBI in 2023.
It also notes that BTMs are used for illicit transactions at double the rate of the overall cryptocurrency industry.
On-the-ground reports from Wisconsin law enforcement agencies of a rise in crypto scams facilitated by BTMs were augmented by an investigation by the Attorney General in the neighbouring state of Iowa, also cited in the guidance, which found that the overwhelming majority of BTM transactions in that state were scam-related.
The regulatory guidance notes that in recent months there has been “an alarming uptick in reports of fraud facilitated by the use of BTMs.”
Implementing guardrails
As crypto scams have proliferated, lawmakers across the US and around the world have raced to put in place legislative and regulatory guardrails to prevent the industry being misused for criminal purposes.
In January 2025, for example, Republican lawmakers in North Dakota introduced a first-of-its-kind bill making crypto ATM operators liable for certain payments to scammers made via their platforms.
Representative Steve Swiontek (R) introduced House Bill (HB) 1447 to the North Dakota legislature to protect North Dakotans from crypto scams.
The bill, which was passed in March, made operators of crypto ATMs liable to reimburse “fraudulently induced” payments made via these platforms within the state.
In the UK, meanwhile, the Financial Conduct Authority (FCA) successfully prosecuted its first case against an individual charged with operating a network of illegal crypto ATMs in October 2024.
Olumide Osunkoya, 45, a Nigerian resident in London, pleaded guilty to five offences in total, including creating and using false documents and possession of criminal property.
According to the FCA, Osunkoya ran a network of at least 11 crypto ATMs, which processed more than £2.6m in crypto transactions between December 2021 and September 2023.
Despite being refused registration with the FCA in 2021, he continued to operate and grow the crypto ATM network in local convenience stores across the UK.
“Osunkoya completed no customer due diligence or source of funds checks on those who used the crypto ATMs,” said the regulator.
Osunkoya was the first person to be criminally prosecuted for unregistered crypto-asset activity under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
Wider, deeper crypto regulation
As legislators and regulators turn their attention to introducing and enforcing rules on the operation of BTMs in an effort to address crypto fraud, providers will need to tighten up their operations and ensure that they are clear on how the regulation affects them.
Given the scale of the threat from fraudulent activity in this area, further regulatory activity is more than likely.
Regulating BTMs is also a further sign that crypto is moving into the mainstream, which offers opportunities for firms that are comfortable operating within a highly regulated environment.
As we see fuller, more comprehensive crypto regulation frameworks, the sector has the chance to shake off its image as a financial “Wild West” and offer services that the average consumer can adopt with confidence.
