Hawaii will ban cash deposits at cryptocurrency automated teller machines (ATMs) starting October 1, 2026, under House Bill No. 1642.
Signed into law by Governor Josh Green, the new rule is aimed at curbing scams and fraud that have cost residents millions of dollars.
What Led to the Decision to Ban Crypto ATMs
The new law, Act 224 (House Bill 1642), prohibits operators from owning or managing kiosks that accept U.S. currency in exchange for digital assets.
While some reports initially described this as a total ban on crypto ATMs, the measure specifically targets cash‑to‑crypto transactions. Residents will still be able to sell crypto for dollars or exchange one digital asset for another at eligible machines.
The law is designed to close a loophole that scammers have exploited by directing victims to deposit cash into kiosks, instantly converting it into crypto that is then routed offshore.
The legislation was prompted by a surge in fraud complaints.
According to the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center (IC3), Americans lost more than $11 billion to digital asset scams in 2025, with Hawaii residents reporting 826 complaints and $80 million in losses, many tied to ATM‑related fraud.
Lawmakers highlighted cases where elderly victims were tricked into withdrawing cash from their bank accounts and depositing it into crypto kiosks under the guise of paying taxes, utility bills, or resolving supposed legal issues.
Once cash is deposited, the funds are converted into crypto and transferred to scammers’ wallets, often overseas, making recovery nearly impossible. The law was therefore framed as a consumer protection measure, designed to reduce the most common entry point for scams.
Alongside an Ongoing Global Trend
Hawaii is now the fourth U.S. state to enact restrictions on crypto ATMs, joining Minnesota, Tennessee, and Indiana, which introduced similar bans earlier in 2026.
Globally, regulators in Europe and Asia have also tightened rules around crypto kiosks.
In the United Kingdom, the Financial Conduct Authority (FCA) declared all crypto ATMs illegal in 2022, citing lack of registration and compliance with anti‑money laundering rules. In Canada, provinces such as Ontario have imposed stricter licensing requirements, while Singapore has limited kiosk operations to regulated exchanges.
The global trend indicates that governments are restricting physical crypto access points while encouraging regulated online platforms that offer stronger identity verification and transaction monitoring.
Crypto ATMs Are Commonly Used as Vessels of Fraud
Crypto ATMs, also known as digital financial asset transaction kiosks, are machines that allow users to buy or sell cryptocurrencies.
A typical transaction involves: entering a phone number or scanning an ID, providing a wallet address, and inserting cash or using a debit/credit card to finalize the purchase. Some kiosks also allow users to sell crypto and withdraw cash.
They became popular because they offered quick access to crypto without requiring a bank account or online exchange registration. To many users, especially those without traditional banking services, kiosks provided a convenient entry point into digital assets.
Authorities emphasize that crypto ATMs are frequently exploited in scam payments and money laundering schemes.
Criminals impersonate government officials, bank representatives, or tech support staff, guiding victims step‑by‑step to deposit cash into kiosks. Once funds are converted into crypto, they are routed through multiple wallets or offshore exchanges, obscuring the trail.
This makes ATMs attractive for fraudsters, drug traffickers, and money launderers, who exploit the machines’ accessibility and anonymity. Victims rarely recover their money, as operators argue that once cash is deposited, the funds are already transferred to the scammer’s wallet.
Law enforcement agencies have described kiosks as “digital cash mules,” enabling criminals to bypass traditional banking safeguards.
