Bitcoin ATMs: The Rise, the Fall, the Risks

The increased attention on cryptocurrency since President Trump returned to the White House is shining the spotlight on Bitcoin ATMs as part of the broader crypto ecosystem. The current Administration's evolving stance on digital currencies, including discussions around regulation and adoption, is spurring public interest and industry engagement with cryptocurrencies, and highlights the role of Bitcoin ATMs as accessible tools for buying and selling digital assets.

The Rise
The first Bitcoin ATM was launched on October 29, 2013, at a coffee shop in Vancouver, Canada. Created by Robocoin, this innovative machine allowed users to buy and sell Bitcoin using cash, bridging the gap between digital and physical currency. In its first week, it processed 348 transactions worth over $100,000, signaling strong interest in the new technology.

Bitcoin ATMs are increasingly seen as tools for financial inclusion, providing access to cryptocurrencies for the unbanked and underbanked populations. Bitcoin ATMs bypass the barriers these individuals face, such as geographic remoteness, lack of documentation, or distrust of financial institutions, by enabling users to convert physical cash into digital assets that can be used for remittances or peer-to-peer transactions.

The industry has seen significant advancements, including support for multiple cryptocurrencies, enhanced security features like biometric authentication, and real-time transaction monitoring. These innovations have made Bitcoin ATMs more secure and efficient, contributing to their widespread adoption. By 2025, the number of Bitcoin ATMs worldwide had grown to over 49,000. The U.S. currently dominates the market, hosting more than 80% of all Bitcoin ATMs.

The Fall
Moving into the New Year, the Bitcoin ATM market has faced a significant downturn, with 971 machines going offline in the month of March alone – the largest decline in its history. This puts the total number of bitcoin ATMs at 37,920.

This drop highlights the challenges Bitcoin ATM operators face of maintaining profitability amid rising operational costs, regulatory scrutiny, and increasing fraud risks, which have collectively dampened the once-rapid growth of the industry.

The Risks
Due to the anonymity and immediacy of crypto transfers through Bitcoin ATMs, they have become the preferred method of payment for many scammers. Fraud involving Bitcoin ATMs has surged, with incidents increasing by 1,000% over the past three years. According to data from the Federal Trade Commission (FTC), between 2020 to 2023, consumer losses in bitcoin ATM scams skyrocketed nearly tenfold, from $12 million annually in 2020 to $114 million annually in 2023. People over 60 years old were more than three times more likely to report losing money to a Bitcoin ATM scam with an average loss of $10,000, reports the FTC.

The Delaware Attorney General recently issued a warning about the dramatic increase in scams involving Bitcoin ATMs. Most of these involve imposter scams where the scammer poses as a law enforcement officer, government official, or someone providing tech support for a non-existent problem. Victims are tricked into depositing cash into these machines and converting it into untraceable cryptocurrency under false pretenses, usually about an urgent matter that requires them to take cash from their bank account and use a QR code to deposit the money into the account of the scammer at a Bitcoin ATM.

Mitigating the Risks
The growing adoption of cryptocurrency and the rise in fraud targeting Bitcoin ATMs has led to increased government and regulatory scrutiny. In the U.S., lawmakers at the state and federal level have introduced laws to address the growing prevalence of scams exploiting Bitcoin ATMs and to enhance consumer protection in the cryptocurrency space, but the regulatory landscape remains fragmented.

Senator Dick Durbin (D-IL) introduced the Crypto ATM Fraud Prevention Act in February 2025 that seeks to add layers of protection to Bitcoin ATM transactions and increase transparency from ATM operators. This legislation emphasizes consumer protection, particularly for vulnerable populations like older adults, who are disproportionately targeted by scams. The bill proposes that victims of fraud who report incidents within 30 days would qualify for full refunds.

At the state level, Arizona lawmakers have introduced House Bill 2387 to combat Bitcoin ATM fraud, which led to $127 million in losses in Arizona alone in 2023. The bill includes measures such as limiting daily transaction amounts to $1,000, requiring state operator licensing, and implementing refund policies for victims of fraud.

Other states that have implemented or proposed Bitcoin ATM regulations to address fraud, compliance, and consumer protection include Illinois, New York, Massachusetts, and Texas. In 2023, a legal dispute erupted between a Texas sheriff and a leading Bitcoin ATM operator over the handling of a ransomware scam involving an elderly woman. In late April, the 82-year-old victim was deceived into depositing $15,000 into a Bitcoin Depot machine at a fuel station. Acting on a warrant, law enforcement seized the funds from the machine and returned them to the victim. Bitcoin Depot filed a lawsuit against the Sherriff's Office to recover the funds asserting that its ATMs provide sufficient warnings about potential scams, cautioning users against sending funds to wallets they do not own or control.

Blockchain-as-a-Service (BaaS) provider Bullet Blockchain has partnered with global IT provider Saliotech to enhance Bitcoin ATM security by integrating advanced technologies that improve fraud detection and compliance. Other security measures that are being implemented to mitigate Bitcoin ATM fraud include:

• Biometric Authentication: Some Bitcoin ATMs now require fingerprint or facial recognition to verify user identity.
• Two-Factor Authentication (2FA): Users must provide a second form of verification, such as a code sent to their mobile device, to complete transactions.
• Enhanced Monitoring: Real-time transaction monitoring and alerts help operators detect suspicious activities promptly.
• Location Security: Bitcoin ATMs are increasingly placed in well-lit, high-traffic areas to deter tampering and unauthorized access.

Financial institutions can play a pivotal role in educating customers about Bitcoin ATM scams by implementing the following strategies:

1. Awareness Campaigns: Launch targeted campaigns through emails, social media, and in-branch posters to inform customers about common Bitcoin ATM scams and warning signs, emphasizing that legitimate authorities or organizations will never ask for payments via Bitcoin ATMs.
2. ATM Warnings: Collaborate with Bitcoin ATM operators to display clear, prominent warnings on machines, advising users to verify any payment requests.
3. Fraud Alerts: Send real-time alerts to customers about trending scams, including specific tactics scammers use with Bitcoin ATMs.
4. Workshops and Webinars: Host educational sessions to teach customers how to identify scams.

The financial sector and regulators must work together to establish robust security measures, educate consumers about Bitcoin ATM and other scams, and enforce compliance with AML/CFT laws to ensure trust and stability within the cryptocurrency ecosystem.. Balancing innovation with consumer protection should always be the priority when assessing the benefits and risk of advancing technology.