Cryptocurrency ATM Scams Prompt New Regulations in North Carolina

The sudden disappearance of financial security is a grim reality for many who have fallen victim to cryptocurrency scams. A recent case in Johnston County highlights the perilous nature of cryptocurrency ATMs, which have become tools for fraud. One local woman lost her entire life savings, believing she was making a legitimate payment to law enforcement. When scammers demanded an additional $4,000, she realized she had been deceived as the call ended. “I just set up an appointment with a counselor, so I’d have somebody to talk to, because it’s really hurt me financially and hurt me mentally,” she shared, wanting to remain anonymous.

Such incidents are not isolated. Another victim in Harnett County reported losing over $30,000, which was described as ‘almost all’ of his savings through similar means. Cryptocurrency kiosks, while seemingly innocuous like regular ATMs, allow instant conversions of cash into cryptocurrencies. However, due to the anonymity of transactions, these machines are increasingly linked with fraudulent activities.

Escalating Cryptocurrency Crimes

The Federal Bureau of Investigation (FBI) has become increasingly concerned about the rise of crimes associated with cryptocurrency kiosks. In 2023, the FBI documented 5,500 complaints related to these ATMs, resulting in losses exceeding $189 million. By 2025, this figure had surged to 13,460 complaints with total losses hitting $389 million. The Federal Trade Commission (FTC) has also noted a near tenfold increase in fraud losses linked to Bitcoin ATMs from 2020 to 2023.

North Carolina’s Regulatory Response

As cryptocurrency scams proliferate, states are stepping up their regulatory measures. North Carolina recently enacted House Bill 920, introduced by State Rep. Neal Jackson (R), aiming to safeguard consumers engaging with cryptocurrency kiosks. The bill seeks to create a framework for better oversight while allowing individuals to manage their finances freely.

Among the key provisions of HB 920 are:

• Mandatory licensing for all kiosk operators under the Money Transmissions Act.
• Supervision of operators by the Commissioner of Banks.
• Fraud warnings and transaction receipts for all transactions.
• Designated compliance and consumer protection officers available at all times.

The legislation also outlines conditions under which kiosk operators must refund the full amount deposited if a transaction is deemed fraudulent and reported within 30 days. To further mitigate fraud risks, new customers will be limited to a daily maximum transaction of $2,000 for the first 30 days, and thereafter capped at $5,000.

North Carolina Attorney General Jeff Jackson has expressed concern regarding the overall usefulness of cryptocurrency kiosks, stating, “We don’t think there is any legitimate use for these devices. They are overwhelmingly used for fraud.” He questions the necessity for such machines when alternative, safer transaction methods are available.

Despite these concerns, David Tente, the executive director of the ATM Industry Association, contends that only a small fraction of transactions at these kiosks are associated with fraud, arguing that many requirements in HB 920 could dissuade legitimate operators.

Industry Reactions to Regulatory Changes

In light of the new legislation, cryptocurrency kiosk operators in North Carolina are evaluating their compliance with the bill’s requirements. WRAL reached out to several operators for insights on how they plan to adapt to House Bill 920.

Byte Federal, represented by its founder Mark Paolillo, stated that most of the regulations align with their current policies, such as maintaining live customer support and implementing anti-fraud measures. They intend to enhance their systems to ensure compliance before the law takes effect in 2027.

CoinFlip, another operator, confirmed that they already implement many necessary consumer protections and are committed to complying with the new regulations. They emphasized their dedication to providing thorough scam warnings and live support for customers.

The ongoing development of consumer protections in the cryptocurrency space indicates a critical move towards transparency and security, as states like North Carolina take steps to address rising scam-related concerns.