A small town in Michigan with no existing crypto ATMs has taken a proactive step to regulate them. Grosse Pointe Farms, located just outside Detroit, has passed a new ordinance aimed at protecting residents from cryptocurrency ATM scams.
The decision came after a local resident was scammed using a crypto ATM in nearby St. Clair Shores. This follows statewide warnings issued in April by Michigan Attorney General Dana Nessel about rising crypto ATM scams, as reported by the Detroit Free Press.
At a city council meeting on Tuesday, Councilmember Lev Wood emphasized the goal: “Scammers tell people to deposit money into these machines, which operate with little transparency. Our ordinance aims to change that and offer residents some protection.”
The ordinance passed unanimously, making Grosse Pointe Farms likely the first Michigan municipality to formally regulate crypto ATMs.
Key regulations introduced:
- Mandatory Registration & Licensing: All crypto kiosks must register with the town’s Department of Public Safety, and operators must hold a business license.
- Consumer Warnings: Machines must display clear fraud warnings and written information about the risks of using crypto ATMs, especially emphasizing that transactions are irreversible.
- Transaction Limits for New Users: For the first 14 days, users are limited to $1,000 per day and a total of $5,000 across the two weeks. These restrictions are lifted after the period.
- Transparency Goals: The aim is to give users time to become familiar with the machines and reduce scam vulnerability.
City attorney Bill Burgess, who introduced the rules, said the restrictions are meant to promote safe use of crypto ATMs by allowing time for users to understand how they work.
A representative from Coinflip, a Chicago-based crypto ATM operator, also spoke at the meeting. Carson Gat shared a personal account of helping stop a scam involving an elderly woman and noted that Coinflip has considered similar protections, like limits and holding periods for first-time users, where scams are most likely to happen. Coinflip has operated in Michigan since 2019 and received its money transmitter license in April.
Other states like Arizona, Nebraska, California, and Washington have also moved to tighten regulations on crypto ATMs this year.
