Senator Durbin proposes bill to combat crypto ATM fraud

Illinois Senator Dick Durbin has introduced the "Crypto ATM Fraud Prevention Act" to address the rising trend of fraud involving cryptocurrency ATMs.

Speaking on the Senate floor on February 25, Durbin cited a constituent's experience of being scammed out of $15,000 via a crypto ATM after a fraudster posing as a law enforcement officer coerced him into depositing money to avoid a fictitious arrest.

Durbin stated that his bill aims to place "common sense guardrails" against these scams.

The proposed legislation includes several measures to protect consumers.

The bill would impose a $2,000 spending limit for new users within a 24-hour period, and a $10,000 limit over a two-week period.

It would mandate direct communication between ATM operators and users conducting transactions over $500.

The bill also stipulates that victims who report the fraud to the police and notify the operator within 30 days of the transaction would be entitled to a full refund.

The legislation responds to alarming trends in crypto-related fraud.

According to the Federal Trade Commission (FTC), losses from fraudulent crypto ATM transactions amounted to over $114 million in 2023.

Durbin noted that the elderly are often targeted in these scams.

The bill would require crypto ATM operators to warn consumers about fraud risks and appoint a chief compliance officer to create an anti-fraud policy for submission to the Financial Crimes Enforcement Network (FinCEN).

Companies violating the proposed regulations could face fines of $10,000 per day.

Durbin's bill, however, would allow state regulations to remain in effect as long as they are not less stringent than federal rules.

Durbin's bill marks one of the initial crypto-focused legislative proposals in the 119th Congress.