Wisconsin Moves to Rein in Crypto ATM Scams with New Companion Bill

Under the proposed legislation, operators of crypto ATM kiosks in Wisconsin would be required to hold a money-transmitting license and implement strict customer identity verification protocols. This includes collecting government-issued ID, customer photos, and basic contact details. Every transaction would require verification, and daily transaction totals would be capped at $1,000.

The bills mandate that ATMs must display prominent warning labels visible to users, alerting them to the risks of fraud directly at the point of use. Transaction fees would also be regulated, a flat maximum of $5 or 3% of the transaction value, whichever is greater.

Operators would also be held accountable for fraud: if a transaction is confirmed as fraudulent, whether by law enforcement or another trusted authority, operators must fully reimburse customers within 30 days.

Recent figures underscore the urgency of intervention. The FBI reported a 99% increase in crypto ATM-related complaints from 2023 to 2024, with associated consumer losses nearing $247 million. The Wisconsin Department of Financial Institutions (DFI) unveiled new regulations effective late July, which require crypto ATM operators to register with the state, impose a $2,000 daily transaction limit, and post anti-fraud warnings.

The rise in scams is not hypothetical. WISN reports Wisconsin residents have lost thousands, even tens of thousands, after receiving seemingly authentic phone calls from authorities instructing them to pay fines or bail with cryptocurrency, then directing them to crypto ATMs. The machines typically strip victims of recourse given the irreversible nature of crypto transactions.

Even before the new bills, Wisconsin had expanded guidance for virtual currency operators. In May, the DFI issued a regulatory guidance memo emphasizing that BTM operators must hold money-transmitter licenses under existing law and must act if they suspect users are victims of fraud. The memo notes Americans lost more than $65 million to crypto ATM scams in just the first half of 2024.

Wisconsin law enforcement and consumer advocates praise the new legislation as a step toward safeguarding vulnerable populations, such as seniors targeted by impersonation scams.

Passing these bills may encounter hurdles. Although Democrats authored the legislation, Republican control of the state legislature means bipartisan support will be crucial for forward momentum.

As political leaders deliberate, consumer advocates urge caution and awareness. Scott Reeder of UW Credit Union noted that victims often find local law enforcement unable to trace crypto transactions, highlighting the limitations faced when funds are moved via irreversible virtual wallets.

Wisconsin’s twin bills present a comprehensive approach to curbing crypto ATM scams: by mandating licensing, ID verification, transaction limits, warnings, and reimbursements, lawmakers aim to close regulatory gaps that scammers exploit.

As bills move through the Assembly and Senate, their dual introduction accelerates consideration. If enacted, Wisconsin could serve as a model for other states—demonstrating that scalable, thoughtful regulations can coexist with innovation in digital payments.