Wisconsin Proposes Crypto ATM Regulations to Curb Fraud and Money Laundering

Wisconsin lawmakers have filed Senate Bill 386 to complement Assembly Bill 384, a coordinated legislative effort to regulate cryptocurrency ATMs and mitigate fraud. Introduced by Senator Kelda Roys and six fellow Democrats in the Senate, the bill mirrors the Assembly version, which was filed by Representative Ryan Spaude on July 31. Both bills require crypto ATM operators to obtain a money transmitting license and enforce KYC procedures, including collecting personal details such as name, date of birth, photo identification, and contact information. The proposed measures also cap daily transactions at $1,000 and limit fees to either $5 or 3% of the transaction value, whichever is higher [1][2].

The legislation mandates that crypto ATM operators place warning labels visible to users, highlighting the risk of fraud. These labels, if passed, will serve as a constant reminder to users of the potential dangers associated with these kiosks. Additionally, the bills stipulate that operators must reimburse users in cases where a transaction is identified as fraudulent within 30 days, such as those involving scams or law enforcement investigations [1].

The bills come in response to a rising number of scams linked to crypto ATMs, which have been exploited for fraudulent activity, cybercrime, and drug trafficking. The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has warned that these kiosks are increasingly used as tools for criminal operations, with vulnerable populations—such as the elderly—being particularly targeted by scammers posing as legitimate service representatives [1].

Similar regulatory actions have occurred globally. New Zealand has banned crypto ATMs outright, while the UK has intensified enforcement efforts, including the seizure of machines and arrests in connection with money laundering. In the U.S., the move in Wisconsin reflects a growing trend among states to impose stricter oversight on crypto infrastructure to prevent misuse. The legislation is also part of a broader response to over $247 million in crypto-related fraud losses reported in the state in recent years [2].

Supporters of the legislation argue that the measures will help reduce the anonymity of crypto transactions, which has made these ATMs attractive to fraudsters. However, critics have expressed concerns that the KYC requirements may deter legitimate users who value the privacy and decentralization of cryptocurrency. There are also fears that such regulations could push transactions into unregulated channels rather than eliminate the problem [1].

With identical legislation introduced in both chambers, the process has been streamlined, increasing the likelihood of the bill becoming law. The urgency of the matter has been underscored by lawmakers, with potential votes expected in the coming weeks. If enacted, the legislation will significantly alter the landscape of crypto ATM operations in Wisconsin and may influence other states considering similar approaches [2].

Source:

[1] title: Wisconsin Democrats File Senate Companion Bill to Rein In Crypto Kiosks (https://decrypt.co/334686/wisconsin-democrats-senate-companion-bill-rein-in-crypto-kiosks)

[2] title: Wisconsin Lawmakers Introduce Bill to Regulate Crypto (https://www.binance.com/en/square/post/28249924965145)