Wisconsin Cracks Down on Crypto Kiosks After $247M Fraud Scandal—Will Regulation Save the Day?

Bad news for crypto scammers: Wisconsin lawmakers are tightening the screws.

After a jaw-dropping $247 million vanished through unregulated crypto kiosks, legislators are reviving stalled oversight proposals. These ATM-like machines—often found in gas stations and convenience stores—have become a Wild West for fraudsters preying on retail investors.

The $247M wake-up call

No more ‘move fast and break things’—unless you’re breaking piggy banks. The proposed rules would force kiosk operators to register with the state, verify user identities, and disclose wallet addresses. Critics argue it’s a band-aid solution for a bullet wound of systemic crypto vulnerabilities.

Regulation vs. innovation? Try regulation vs. grift.

Proponents claim the measures will curb money laundering and protect clueless buyers. Skeptics counter that fraud will just migrate elsewhere—after all, where there’s speculative mania, there’s always a fresh batch of ‘greater fools.’

One thing’s certain: When traditional finance screws up, they get bailouts. When crypto screws up, they get… a footnote in the next Senate hearing. Stay tuned.

FinCEN Flags 99% Surge in Crypto Kiosk Scams, $247M in Losses

The bills come as the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) warns of a sharp rise in crypto kiosk scams, with fraud complaints up 99% in 2024 and reported losses climbing 31% to nearly $247 million.

Wisconsin’s proposals WOULD place kiosk operators under the state’s money transmitter licensing system and impose strict consumer protections, including fraud alerts, transaction caps, and tighter identity checks.

If passed, both bills would cap daily exchanges at $1,000 per customer and limit operator fees to $5 or 3% of the transaction amount.

Machines would be required to display bold warnings, such as: “FRAUD ALERT! Criminals seek to defraud VIRTUAL currency customers by impersonating loved ones, government officials, law enforcement officers, or charities.”

The legislation also mandates robust identity verification before any transaction, collecting a customer’s name, date of birth, address, phone number, and government-issued photo ID.

Proponents say these measures, while reducing anonymity, are essential to building public trust.

Wisconsin’s SB386 would force #Bitcoin ATMs to require full KYC, photo ID, and cap transactions at $1k. pic.twitter.com/JM2tydjE7i

“While crypto ATMs were developed as a natural extension of the crypto ecosystem… the absence of robust KYC protocols has made them vulnerable to money laundering and illicit activities,” said Arjun Vijay, founder of exchange Giottus.

The bills go further by requiring refunds for fraud victims who notify authorities within 30 days, a MOVE designed to protect elderly and vulnerable residents who have been prime targets in scams.

Wisconsin’s efforts follow similar crackdowns abroad, including Australia’s transaction limits and New Zealand’s planned ban on crypto kiosks.

In the US, Washington state’s Spokane city council recently voted to remove all kiosks after federal probes linked them to billions in fraud-related losses.

Both bills are now before the Committee on Financial Institutions, with identification requirements slated to take effect 60 days after passage if approved.

More Countries Clamp Down on Crypto ATMs

Wisconsin’s move follows similar efforts abroad. In Australia, AUSTRAC recently introduced stricter rules for crypto ATM operators, including tighter cash limits and monitoring.

Last month, the regulator refused to renew the registration of a local crypto ATM operator, Harro’s Empires. The agency placed operating conditions, including transaction limits, on them.

In the US, Spokane, Washington, has banned crypto ATMs entirely, citing their use in scams targeting vulnerable residents.

Lawmakers in the US Senate are also attempting to tighten laws on a state and local level, with one attempt led by Illinois Senator Dick Durbin.

He has introduced the Crypto ATM Fraud Prevention Act, which would bring in legislative measures designed to protect the public, while attempting to limit inconvenience for law-abiding users.

New users would be prevented from spending more than $2,000 a day at one of these machines, rising to $10,000 in a 14-day period.