Arizona lawmakers target Bitcoin scams with crypto kiosk regulations

Yahoo

28-03-2025

Illustration via Getty Images
A bill aimed at helping prevent bitcoin scams by adding new regulations to 'crypto kiosks' has moved one step closer to becoming law.
Arizona has seen an increase in the number of people getting scammed via cryptocurrency, so much so that Attorney General Kris Mayes issued a letter of support to the Yavapai County Sheriff's Office last November in its efforts to crack down on this type of fraud.
The scam involves the use of 'crypto kiosks' that can be found at some businesses or malls, which allow a person to convert cash into Bitcoin or other cryptocurrencies. Scammers often pretend to be a loved one, a government agency or gain a person's trust in some other way before asking them to deposit a large sum of money into one of these cryptocurrency ATMs.
Last year, YCSO and the AG issued letters asking business owners in Yavapai County to put warnings on the machines similar to those displayed around gift cards at stores due to the proliferation of a similar type of scam in which victims purchase gift cards and send them to scammers.
House Bill 2387 by Rep. David Marshall, R-Snowflake, would add regulations to these kiosks, as well as warnings to consumers, in an attempt to prevent scams from continuing to proliferate.
'There have been people who have driven down from the mountain where we live to get to these ATMs, and by the time they get back home, their money is gone,' Marshall told the Senate Committee on Judiciary and Elections Wednesday.
Marshall said he 'dabbles' in cryptocurrency himself, but does so knowing that you have to be careful in or else you could be easily defrauded.
In 2023, Americans lost $5.6 billion in cryptocurrency related scams, with the majority of victims being the elderly, a trend that was echoed by those who spoke in favor of the bill in committee.
Brendon Blake, the associate state director of advocacy for AARP, told the committee that Arizona ranks No. 6 in the nation for the amount of money lost to fraud. Peoria Police Deputy Chief Douglas Steele told the committee that only an estimated 40% of cases are actually ever reported to law enforcement.
Marshall's bill would require the operator of the kiosks to provide warnings to consumers before they can do a transaction and give users information about how to identify cryptocurrency fraud. The bill also requires the kiosks to give physical receipts that would include all the information needed to be given to law enforcement in the event the person believes they did engage in a fraudulent transaction.
And it would limit the amount of money a new account can deposit or send within a 72-hour period. That's because the scam often sees people creating new accounts and depositing large amounts of money to scammers in repeated transactions.
The bill further allows 'a relevant government authority' to request evidence of an operator's 'blockchain analytics' and requires operators to maintain a written anti-fraud policy that conforms to federal anti-money laundering laws.
The Attorney General's Office told the Arizona Mirror that it worked with Marshall on the legislation and hopes Congress takes action at the federal level so that it does not just fall to the states to regulate the fraud.
Crypto heists have become a growing concern, with North Korean hackers recently making the largest haul of $1.5 billion in cryptocurrency. But other types of scams involving artificial intelligence are also seeing large sums of cash being stolen. Last year scammers using deep fakes convinced finance workers to send them $25 million.
AI has been used to clone loved ones' voices in order to get people to send them money via these kiosks, the AG's Office said.
'There needs to be more done to educate people of all ages because anyone can be victims of these scams,' Richie Taylor, a spokesman for Mayes, told the Mirror.
Making sure you have a possible safe word or key phrase with loved ones in case you get a phone call that feels 'off' can help you avoid a scammer hoping to prey on your emotions, Taylor said.
There is no one type of scam technique, as the scammers are using styles such as romance scams, investment scams and others to lure people in, so the AG's Office suggested that people try to educate themselves on how these types of scams work.
If you or a loved one feel you may have become the victim of a scam the AG suggests you go to your local law enforcement agency, but you can also file a report with the AG or the FBI.
Lawmakers on Wednesday wondered if there was more they could do, and Marshall said he mulled even banning the kiosks outright in the state. Taylor said their office is 'open to something more stringent,' but said it is critical that federal action be taken.
'I wish it was a little more broad,' Sen. Analise Ortiz, D-Maryvale, said when voting yes on the bill, adding that these scams are 'really atrocious.'
The bill passed unanimously out of committee heads next to the full Senate for consideration. If it passes the Senate, it will return to the House of Representatives for a final vote before it can go to Gov. Katie Hobbs.
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