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New Law Targets Crypto ATM Fraud

A new cryptocurrency kiosk law sets a daily transaction limit of $1,000 per customer, requires operators to issue refunds in case of fraud and mandates transaction receipts.

David Lewellen,

AARP

Published July 01, 2026

photo illustration with computer circuitry and the word crypto

GETTY IMAGES

As a small-town police chief in South Dakota, Jeremy Wellnitz has witnessed first-hand the rapid spread of scams involving cryptocurrency.

“We’ve seen victims lose thousands of dollars,” says Wellnitz, who leads the department in Clark, located in the northeastern part of the state. “I thought it was very important to try to get some kind of a handle on it.”

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Earlier this year, Wellnitz testified in support of a new South Dakota law aimed at regulating cryptocurrency kiosks, also known as crypto ATMs. The machines, which are located in gas stations, grocery stores and other businesses, convert cash into Bitcoin and other digital currencies.

They’ve become a popular tool for scammers since transactions often involve overseas exchanges, making it difficult for law enforcement to trace and recoup money.

The new law, which was slated to take effect in July, sets a daily transaction limit of $1,000 per customer and requires operators to issue refunds in case of fraud. It also requires paper receipts for transactions and warning signs on the machines.

State Sen. Steve Kolbeck (R-Brandon) co-sponsored the legislation. “I was shocked, once I started to dig into it, at the sheer amount of money,” Kolbeck notes. “Some of the frauds had gone on for nine months, and people had lost their life savings.”

At the same time, Kolbeck says he wanted to make sure the machines could still be used for legitimate business.

AARP South Dakota advocated for the law and has focused on educating the public about the fraud risks of crypto ATMs. “One of our big arguments was this was pro-consumer legislation,” says Erik Nelson, the organization’s associate state director of advocacy.

At least 30 states have enacted laws to regulate crypto ATMS — including bans on the machines in Indiana, Minnesota and Tennessee, AARP research shows.

Wellnitz notes that instances of crypto fraud often go unreported because people are embarrassed or ashamed to admit their money was stolen. But, he says, it’s important that victims contact law enforcement immediately to have a better chance at recouping lost funds.

“South Dakotans are really friendly and trusting, and scammers take advantage of that,” he adds. “It’s not a small-city problem or a big-city problem. It’s everywhere.”