Wyoming Lawmakers Move to Rein In Crypto ATMs After Millions Lost to Scams

Law enforcement agencies across Wyoming are raising urgent concerns after residents lost more than $3 million to cryptocurrency ATM scams in 2025 alone. In response, State Representative Ken Clouston is leading a legislative effort to place these automated kiosks under the direct supervision of the Wyoming Division of Banking. The proposal comes amid a sharp national increase in fraud tied to crypto kiosks, with federal data showing losses exceeding $333 million last year. Authorities in Gillette and throughout Campbell County report that scammers are increasingly targeting vulnerable individuals, prompting lawmakers to pursue tougher anti-money laundering controls aimed at cutting off the flow of illicit funds through what they describe as loosely regulated digital gateways.

The rapid spread of virtual currency kiosks throughout Wyoming has exposed major gaps in financial oversight, gaps that criminals have been quick to exploit. Although the state has cultivated a reputation as a welcoming environment for digital asset innovation, the surge in consumer fraud is driving a shift toward stricter regulation. Under the proposed legislation, operators would be required to secure money transmitter licenses from the Wyoming Division of Banking, placing crypto ATMs under the same regulatory standards as traditional financial services. Centralizing oversight would allow the state to impose clear operational rules designed to identify and interrupt transactions tied to criminal proceeds, including mandatory fraud warnings and strict compliance with reporting requirements for large or suspicious activity.

The legislation would also impose far more stringent entry requirements on kiosk operators. Every owner would be subject to detailed background checks and financial audits, marking a sharp break from the current system, which allows many machines to operate with minimal registration. By folding these businesses into the formal banking regulatory framework, Wyoming would require operators to be bonded and insured, offering a measure of financial protection for victims in cases of systemic misconduct. The Division of Banking would gain authority to conduct surprise inspections at kiosk locations to ensure that anti-fraud notices are prominently displayed and compliance measures are actively enforced. Supporters of the bill say this level of scrutiny is intended to discourage casual criminal use without eliminating access for legitimate consumers.

Law enforcement officials argue that weak oversight has allowed crypto kiosks to become a preferred tool for scammers because they enable fast, relatively anonymous conversions of cash into digital assets. Investigators note that this speed and anonymity make the machines especially useful during the layering stage of money laundering. To counter this, the proposed law would require licensed operators to adopt comprehensive know-your-customer standards, including the collection of verified identification from users. By stripping away anonymity, lawmakers aim to remove a key incentive for fraudsters. Operators would also be required to monitor transactions for warning signs such as repeated rapid deposits or unusual activity involving elderly users, aligning Wyoming’s digital asset sector more closely with federal anti-money laundering expectations.

Robust recordkeeping requirements form another core element of the proposal. Operators would have to maintain detailed digital records of every transaction, documenting both the source of the cash and the destination wallet address. These records would be accessible to law enforcement through appropriate legal processes, dramatically shortening the time needed to trace stolen funds. Investigators have long complained that inconsistent data standards across different kiosk manufacturers slow investigations. Standardizing these requirements is intended to make Wyoming a far less attractive destination for laundering illicit proceeds. The legislation also addresses offshore transfers by requiring kiosks to clearly disclose the risks associated with non-custodial wallets and the irreversible nature of blockchain transactions.

The human toll of unregulated kiosks is most evident in the cases documented by investigators in Campbell County, where victims have been manipulated into depositing large sums of cash to settle fabricated legal fees, taxes, or utility bills. In addition to identity verification, lawmakers are weighing daily transaction limits and mandatory fee transparency to slow the momentum of scams. Transaction fees that can exceed 20 percent are often not clearly disclosed, compounding victims’ losses. By limiting how much cash can be processed in a single day, lawmakers hope to create a crucial window during which law enforcement or family members can intervene. These measures are designed to replicate safeguards common in traditional banking, where human oversight frequently stops fraudulent transfers before they are completed.

The bill would also require permanent, highly visible fraud warnings on all machines. Written in plain language, the warnings must explicitly state that no government agency or utility company will ever demand payment through a crypto ATM. Lawmakers point to evidence from other states showing that such warnings can disrupt scams by giving victims a moment to reassess while under intense psychological pressure. The proposal further explores a cooling-off period for first-time users or high-value transactions, during which funds would be temporarily held in escrow, allowing customers to cancel if they realize they are being defrauded. If adopted, these provisions would rank among the strongest consumer protections for digital asset transactions in the country.

Supporters describe the legislation as a necessary step in the evolution of Wyoming’s digital asset market, emphasizing stability and public safety rather than restriction. Representative Clouston has stressed that the goal is not to prohibit the technology but to ensure it operates within a transparent and secure framework. The plan would integrate crypto kiosks into the nationwide multistate licensing system, improving the ability to track operator histories and compliance. As federal agencies such as the FBI continue to report steady growth in kiosk-related fraud, state-level regulation is seen as an immediate shield for local communities. Enhanced reporting obligations would require prompt filing of suspicious activity reports, giving investigators the data trail needed to pursue scam networks that often operate across borders.

Beyond immediate fraud prevention, lawmakers argue the bill could reshape Wyoming’s digital finance landscape in the long term. A clear and predictable regulatory environment is expected to attract reputable financial technology companies while pushing out opportunistic operators that thrive in poorly regulated spaces. This shift could foster a healthier market in which compliant services replace high-risk kiosks. The Wyoming Division of Banking would also take on a public education role, helping residents understand how to use digital assets safely and recognize warning signs of fraud. Together, these measures are intended to preserve Wyoming’s reputation for innovation while providing meaningful protection for those most at risk.

By fLEXI tEAM