In August 2025, Wisconsin lawmakers introduced Senate Bill 386 and Assembly Bill 384, aiming to regulate cryptocurrency ATMs (BTMs) and curb the rising tide of fraud associated with these machines. This legislative initiative follows a nationwide surge in crypto-related scams, with victims reporting losses nearing $247 million in 2024 .

Key Provisions of the Proposed Legislation

1. Know Your Customer (KYC) Requirements: Operators of crypto ATMs would be mandated to collect comprehensive user information, including full names, dates of birth, addresses, phone numbers, and email addresses. Additionally, users must present a government-issued photo ID, such as a driver's license or passport, and have their photograph taken during each transaction .

2. Transaction Limits: To mitigate large-scale fraud, the bills propose a daily transaction cap of $1,000 per user. This measure aims to prevent individuals from being coerced into depositing substantial sums into BTMs under fraudulent pretenses .

3. Fee Regulations: The legislation seeks to cap transaction fees at either $5 or 3% of the transaction amount, whichever is higher. This provision addresses concerns over exorbitant fees often charged by crypto ATMs, which can be significantly higher than those of online exchanges .

4. Fraud Prevention and Refunds: Operators would be required to display prominent fraud warning labels on their machines, alerting users to potential scams. Furthermore, if a transaction is reported as fraudulent within 30 days, operators must fully reimburse the affected user .

5. Licensing and Oversight: The bills stipulate that all crypto ATM operators obtain a money transmitting license from the Wisconsin Department of Financial Institutions. This measure ensures that operators adhere to state regulations and provides a framework for accountability .

Implications for Stakeholders

• Consumers: The proposed regulations aim to enhance user protection by implementing stringent identity verification processes and providing avenues for recourse in cases of fraud. These measures are particularly crucial for vulnerable populations, including the elderly, who have been disproportionately targeted by scammers .

• Operators: While the legislation seeks to create a safer environment for users, it also imposes significant compliance burdens on operators. Smaller businesses may face challenges in meeting the stringent requirements, potentially leading to market consolidation where larger entities dominate the landscape .

• Regulatory Landscape: Wisconsin's legislative efforts align with a broader global trend toward tightening regulations on crypto ATMs. Countries like New Zealand and the United Kingdom have already implemented similar measures, reflecting a growing consensus on the need for enhanced oversight in the crypto space .

Wisconsin's proposed legislation represents a proactive approach to addressing the challenges posed by crypto ATM-related fraud. By instituting comprehensive KYC requirements, transaction limits, fee regulations, and fraud prevention measures, the state aims to create a more secure environment for cryptocurrency transactions. However, the success of these initiatives will depend on effective implementation and the ability of operators to adapt to the new regulatory framework.