Cryptocurrency ATMs are quickly disappearing from the US landscape as kiosk operators in two US states struggle with bans and restrictions as novel regulations come into force.
Cryptocurrency ATM regulations adopted by Tennessee and Georgia went into effect on Wednesday, imposing an outright ban in the former and requiring transaction and reporting limits in the latter. The two states’ measures followed bans in Indiana, which went into effect in March, and Minnesota, which was set to ban ATMs on August 1.
The Tennessee law, signed by Gov. Bill Lee in April, prohibits the exploit and installation of cryptocurrency ATMs and kiosks, while the Georgia law requires ATM operators to limit funds sent to novel and existing users, warn customers and, in some cases, refund money to those who may have fallen victim to fraud.
Before the ban went into effect statewide on July 1, there were 185 ATMs and cryptocurrency kiosks operating in Tennessee. Source: CoinATMRadar
Many U.S. state governments and municipalities have begun individually cracking down on cryptocurrency ATM operators in response to incidents in which residents, especially seniors, were tricked into sending funds to fraudsters. Lawmakers in Delaware and New Jersey have proposed similar measures, banning the machines altogether.
Related: A Massachusetts city will consider banning the exploit of cryptocurrency ATMs, citing financial risks
The restrictions may have already contributed to the collapse of at least one ATM operator. In May, Bitcoin Depot filed for Chapter 11 bankruptcy. Just days earlier, the company revealed that it had “serious doubts” about its future amid a challenging regulatory environment and lawsuits.
“The bankruptcy of Bitcoin Depot is likely a harbinger of what lies ahead for the broader U.S. cryptocurrency industry over the next few years,” Roshan Dharia, Echo Base CEO and restructuring advisor, told Cointelegraph after the Chapter 11 filing. “The customary model has relied on high trading spreads and narrow regulatory control to balance extremely high regulatory compliance, cash logistics, fraud cleanup and retail revenue sharing costs. This equation is breaking down as states increasingly impose consumer protection standards that lower fees, escalate operator liability for fraud-related activities, and escalate expectations for transaction monitoring and reimbursement.”
Canada is considering a nationwide ATM ban
While it hasn’t gone into effect yet, federal policymakers in Canada have proposed a blanket ban on cryptocurrency ATMs across the country. The proposed policy, which would continue to allow Canadians to buy digital assets from brick-and-mortar money services companies, was a response to what officials called ATMs “a primary method for fraudsters to defraud victims and for criminals to park the proceeds of crime.”
