Move To Ban Crypto ATMs in US States Raises Questions About Approach, Liability

Crypto ATMs, often found in convenience stores, gas stations and shopping centres, allow users to exchange cash for cryptocurrency. 

In March, Indiana became the first state to ban crypto ATMs. Tennessee followed in April, while Minnesota approved a similar measure that takes effect on 1 Aug and requires existing machines to be removed by the end of the year.

New Jersey and Delaware are now advancing their own statewide bans. However, Delaware's measure would take it a step further. 

Under New Jersey's Senate Bill 2141, businesses would be prohibited from owning, controlling, installing, managing, selling or offering cryptocurrency ATMs in the state. The bill defines a crypto ATM as a "physical, internet-connected kiosk" that allows users to buy, sell, send or receive cryptocurrency using cash, debit cards or credit cards.

While Delaware's House Bill 441 also would ban crypto kiosks, requiring existing machines to be removed within 90 days, the measure also would ban attempts to get around the law through cashier-assisted or point-of-sale crypto ATM-like transactions. Notably, it also would extend liability to people who help facilitate those transactions or knowingly allow them to take place on their property.

New Jersey's bill is awaiting consideration by the full Senate, while Delaware's proposal has advanced out of a House committee and is awaiting a vote by the full House. Both bills would still need approval from lawmakers and their respective governors before becoming law.

Moving between cash and crypto 

The different approaches taken by New Jersey and Delaware suggest that while states may agree crypto ATM scams are a growing problem, they don't necessarily agree on how broad the response should be – especially as crypto companies develop alternatives to traditional ATMs.

In May, exchange operator Kraken announced a partnership with MoneyGram that allows users to convert cryptocurrency into cash through MoneyGram's retail network in more than 100 countries. Kraken handles customer onboarding and identity verification, while MoneyGram provides the licenced money transfer services. Unlike crypto ATMs, the service does not rely on standalone kiosks.

"I think regulators will definitely look at the broader crypto-to-cash ecosystem, but I don't see services like Kraken-MoneyGram being treated the same way as crypto ATMs," Ivan Patriki, co-founder of financial analytics platform QuantMap, told Sandmark. "One is a physical terminal, while the other operates through an established financial network."

Patriki said the focus should be on whether consumers are protected and whether companies can be held responsible when something goes wrong.

"If users know who they're dealing with, there's a clear compliance process, and someone is responsible when issues arise, that's very different from a machine sitting in a convenience store," he said. "Regulators should focus less on the technology itself and more on whether meaningful consumer protections actually exist."

Scams drive the crackdown

The push to ban crypto ATMs has been driven by a rise in fraud involving the machines.

According to the FBI's Internet Crime Complaint Center (IC3), the agency received 13,460 complaints involving cryptocurrency kiosks in 2025, with reported losses totalling nearly $389mn. That was a 23% increase in complaints and a 58% increase in losses from the previous year. More than half of the complaints involved people over the age of 50, accounting for more than $302mn in losses.

Texas recorded the highest losses at $56.8mn, followed by Florida at $32.8mn and California at $24mn. New Jersey residents reported 369 complaints involving losses of nearly $17.9mn, while Delaware recorded 49 complaints totalling about $675,000.

Authorities say the machines have become a popular tool for scammers because transactions can happen quickly and are difficult to reverse. The rise in complaints has also come as cryptocurrency has become more widely used.

What happens next?

Patriki questioned whether banning crypto ATMs would solve the underlying problem, arguing that scammers tend to adapt when one avenue is cut off. 

"I don't think banning ATMs magically solves the scam problem. Scammers are usually exploiting human behaviour more than specific technology," he said. "I've said before that financial scammers are incredibly adaptable. They don't stay loyal to a specific platform, payment method, or technology. If one route gets blocked, they usually migrate somewhere else."

He added that he believes the restrictions could speed up a shift that is already underway, with people increasingly choosing cash-out services offered through companies they already know and trust.

"Walking into a familiar retail location feels much more natural for mainstream users than figuring out a dedicated crypto machine," he said. "Crypto adoption often happens when the crypto part becomes almost invisible."

The US remains the world's largest crypto ATM market, with around 30,000 machines nationwide in operation as of March, according to Coin ATM Radar. But Patriki expects that number to decline as other cash-out options become more common.

"Consumers generally gravitate toward services embedded within financial apps and trusted networks rather than dedicated crypto hardware when alternatives become available," he said.