A town in Michigan that has no crypto ATMs has passed an ordinance that puts multiple restrictions on the kiosks and their operators with the aim of protecting residents from scams.
The city council of Grosse Pointe Farms, a small town just outside of Detroit, Michigan, passed the ordinance at a meeting on Tuesday after a discussion on regulating crypto ATMs was prompted by a report of a local resident being scammed at a crypto ATM in the nearby town of St. Clair Shores.
In April, Michigan Attorney General Dana Nessel issued statewide warnings about crypto ATM scams, and local news outlet the Detroit Free Press had reported on crypto ATM scams in the city.
Rules give “a little bit of help” to residents
“The crooks tell people to go and put money into these machines, and it’s a very untransparent situation,” Councilmember Lev Wood said at the meeting. “What we want to do with our ordinance tonight is to enhance transparency and provide a little bit of help to our residents.”
The ordinance was passed unanimously, with council members noting that this makes Grosse Pointe Farms likely the first municipality in Michigan to regulate crypto ATMs.
Ordinance to limit transactions
City attorney Bill Burgess outlined four main regulations for any future crypto ATMs in the town.
Crypto kiosks must be registered with the Department of Public Safety, and operators must obtain a business license. There also needs to be mandatory warnings and written consumer protection warnings about fraud risks and irreversible transactions.
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The rules also impose transaction limits for new users within the first two weeks. Putting a $1,000 daily transaction cap and $5,000 aggregate limit over the period, which are removed after 14 days.
“The idea is that someone at that point would become more familiar with the utilization of the machine,” said Burgess.
Coinflip rep shares experiences
Carson Gat, a representative from Chicago-based digital currency firm and ATM operator Coinflip, also attended the meeting to share a personal story of preventing an elderly woman from being scammed.
He said that the firm has looked into limits and holding periods on the first transactions to limit the first time a new customer uses the machine, “because that’s where you see the majority of these instances taking place.”
Coinflip has operated in the state of Michigan since 2019 and was officially granted a money transmitter license in April.
Arizona, Nebraska, California, and Washington states have all cracked down on crypto ATMs this year.
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