Crypto Kiosk Scams Are Rising. We Need Better Laws to Stop Them.

COMMENTARY

As a former law enforcement officer, I’ve spent a lot of time thinking about public safety and protecting people from con artists running complex financial scams. These criminals exploit various financial systems to prey on people. Cryptocurrency’s booming popularity has brought with it the challenges of fighting back against fraudsters who, just like in traditional finance, abuse the industry to steal from unsuspecting citizens.  

In response to some unfortunate scams, cryptocurrency kiosks are under fire and labeled as safe havens for illegal activity. But the kiosks are not the villains in this story — the villains are the scammers who are perpetrating the crimes. You might be surprised to learn that reputable crypto kiosk operators actually provide law enforcement with critical information to assist victims of financial crimes.   

Crypto kiosks are found in neighborhood locations — like supermarkets and convenience stores — and offer customers the ability to quickly and conveniently purchase cryptocurrency with cash. They’re simple to use, and, most importantly, their transactions are transparent and traceable.     

When fraud occurs at a kiosk, operators provide the evidence needed to support investigations, especially when it comes to subpoenas. If there’s anything that makes tough jobs easier, it’s having access to more evidence from the crime scene. Now, imagine investigating the illicit flow of money. Thanks to digital records, crypto kiosks make it possible to better understand how crimes happen.  

A common misconception is that these kiosks are an unregulated service. In reality, reputable operators follow high standards for consumer protection, implement anti-scam disclosures, and provide subpoena support to law enforcement. Some kiosk operators deploy live customer service teams trained to spot red flags and intervene if they suspect someone is being scammed.

While bad actors will always exist in any industry, the good operators take fraud prevention seriously, and their safeguards have been critical in stopping crimes before they happen.  

Unfortunately, not everyone sees the value in these kiosks. Across the country, legislators have proposed regulations that could put kiosks out of existence. I’ll be the first to say we need strong regulations to protect consumers. But if legislators’ goal is to stop fraud, then let’s enact policies that do just that with requirements that operators use blockchain analytics to stop high-risk transactions, issue highly visible scam warnings, and employ robust compliance and customer service teams. We might even see federal legislation that could bring consistent, strong consumer protection to crypto kiosk users given the Trump administration’s focus on positioning the U.S. as the global leader in the digital asset space.  

To be clear, regulations requiring improved security measures will go a long way toward protecting consumers, but these measures will not completely stop scammers, who have been taking advantage of people since the beginning of commerce. But that doesn’t mean we shouldn’t try to put the right laws in place to help protect people.

Some proposals would effectively outlaw the crypto kiosk industry with transaction limits and fee caps. This is not the right approach for fighting back against the bad actors behind the scams.

The absence of reliable, commercialized services would play into criminals’ hands by pushing consumers towards shady, dangerous avenues for buying and selling cryptocurrency with cash. If that happens, more people will get hurt and governments will have no chance to regulate that system. 

I’ve spent my career tracking down criminals who think they can outsmart the system. The safety measures taken by crypto kiosk providers don’t just help us level the playing field; they tilt it in favor of transparency and accountability. They empower everyday people to access the digital economy safely while enabling law enforcement to respond to nefarious activity.   

The best solution is to follow an approach that brings together the public, industry, policymakers and law enforcement. If we want to keep communities safe and hold criminals accountable, let’s ensure these kiosks are regulated in a responsible way and do everything we can to alert and warn the public about scammers.

That’s not only good policy, it’s good for public safety.   

Jody Weis is a retired FBI special agent and former superintendent of the Chicago Police Department. Weis can be reached on LinkedIn.