Bitcoin ATMs | Wisconsin Bill Pushes KYC, Licensing

Wisconsin lawmakers are moving in tandem to regulate bitcoin ATMs, with two identical bills filed in the Senate and Assembly to combat the growing number of scams linked to the machines.

The bills are looking to implement strict Know-Your-Customer (KYC) information for bitcoin ATM users, as well as further licensing requirements for the operators.

Senate Bill 386, sponsored by Senator Kelda Roys and six Democratic colleagues, mirrors Assembly Bill 384, introduced last month by Representative Ryan Spaude and ten co-sponsors. The bills will speed up the process by moving through both chambers at the same time.

The measures target the state’s 582 bitcoin ATMs, often found in gas stations, grocery stores, and convenience shops. Lawmakers say these machines have become a tool for fraudsters, especially targeting seniors.

The push comes after FinCEN data showed a 99% increase in bitcoin-kiosk-related fraud complaints in 2024. Reported losses also rose 31% to nearly $247 million nationwide.

Supporters of the bills say the largely unregulated nature of these kiosks makes them “a soft target for scammers,” who often impersonate loved ones, charities, or government officials to trick people into sending them bitcoin.

Sen. Roys said without safeguards, these machines have become hotbeds for serious crimes. She said while new technology is “exciting,” it can also invite scams or fraud.

Under the proposed legislation, all bitcoin ATM operators in Wisconsin would have to get a state money transmitter license. They would also have to follow strict KYC procedures before allowing transactions.

First-time users would have to provide their full name, date of birth, address, phone number, email, and government-issued photo ID. Operators would also have to take a photo of the customer at the machine.

Daily limits would be $1,000 per customer, and operator fees would be limited to the greater of $5 or 3% of the transaction amount.

The bills also require each kiosk to display a bold, visible “Fraud Alert” on the machine and on the transaction screen. The warning would have to describe common scam tactics and be acknowledged by the user before continuing.

Under the bill, operators would have to refund customers for fraudulent transactions if notified by law enforcement within 30 days.

Sergeant Scott Goldberg of the Wood County Sheriff’s Department said the goal is to protect people from losing large amounts of money. He said victims have lost $2,000 to $60,000 at a time, and rural counties like his see far fewer cases than urban areas.

Backers of the bills say tighter rules will build public trust in Bitcoin.

Critics, however, say eliminating anonymity undermines one of the original appeal of the scarce digital asset. Privacy advocates say requiring personal data for every transaction will scare off legitimate users.

Both SB 386 and AB 384 are before the Committee on Financial Institutions in their respective chambers. If passed, the identification and fraud warning requirements will take effect 60 days after the bill becomes law.