Main Points:
- Spokane City Council unanimously approved a ban on all cryptocurrency ATMs, effective from June 16, 2025, citing a surge in fraud targeting vulnerable residents.
- Operators must remove existing kiosks within 60 days or face civil infractions and business license revocation.
- Crypto kiosks offer physical access points to DeFi and Web3 services, but have become favored tools for impersonation and “emergency” scams.
- Ambiguities remain regarding mixed-function ATMs that handle both fiat and crypto services and the precise enforcement scope.
- Similar measures have emerged in other U.S. municipalities (e.g., Stillwater, MN) and overseas, reflecting a global trend toward regulating unattended crypto kiosks.
- The Spokane Police Department will monitor reported incidents post-ban to evaluate its effectiveness in reducing crypto-related crimes.
- Users and businesses must consider alternative on-ramps—such as licensed exchanges and peer-to-peer platforms—to avoid unintended exclusion from digital-asset ecosystems.
- Ongoing dialogue between regulators, law enforcement, and industry participants is essential to craft nuanced rules that deter fraud without stifling innovation.
Introduction
On June 16, 2025, the Spokane City Council, representing Washington state’s second-largest city, voted unanimously to prohibit all cryptocurrency automated teller machines (ATMs) within city limits. The ordinance, proposed by Council Member Paul Dillon, mandates the removal of every virtual-currency kiosk within 60 days, aiming to curb a notable uptick in fraud schemes that exploit these machines as conduits for money extraction from unsuspecting victims. This move positions Spokane at the forefront of a nascent wave of local regulations targeting unattended crypto-on-ramps and underscores the tension between fostering technological access and safeguarding consumer welfare.
Legislative Process and Rationale
Council Member Paul Dillon introduced the “Virtual Currency Kiosk Prohibition for a Safer Spokane” ordinance after local law enforcement and community advocates reported a “steady increase in victims losing thousands of dollars” via crypto ATMs. During deliberations, Spokane Police Detective Tim Schwering testified that fraudsters often impersonate IRS agents, police officers, or tax officials, coercing individuals—frequently elderly or low-income—to convert life-savings into cryptocurrency for “protection” against fabricated legal action. By the time funds are deposited, they are irretrievably funneled to overseas accounts, often in jurisdictions like China, Russia, or North Korea.
The council emphasized that existing state and federal frameworks were insufficient to address kiosk-based scams, prompting a local solution. The unanimous vote reflected bipartisan concerns over consumer protection, particularly for vulnerable demographics disproportionately targeted by such cons.
The Role of Crypto ATMs in the Web3 Ecosystem
Crypto ATMs—sometimes called crypto kiosks—serve as physical access points enabling users to convert fiat currency into digital assets with minimal technical barriers. Advocates highlight their potential to broaden financial inclusion by providing hands-on on-ramps to decentralized finance (DeFi), particularly for unbanked or underbanked populations. Users can, at the press of a screen, purchase Bitcoin, Ethereum, or other tokens and transfer them to personal wallets, fostering grassroots adoption of blockchain services.
However, the unattended nature of these devices also makes them ripe for misuse. Without in-person oversight, malicious actors can manipulate software interfaces, spoof customer support lines, or post fraudulent instructions directing victims to send funds under false pretenses. The rapid, irreversible nature of blockchain transactions compounds the risk: once crypto leaves the kiosk, standard banking dispute mechanisms are inapplicable.
Scope and Ambiguities of the Ban
While the ordinance clearly encompasses standalone crypto ATMs, it leaves open questions about hybrid machines. Some kiosks accept fiat for bill payment services or prepaid mobile top-ups in addition to offering crypto transactions. The city has yet to clarify whether operators must entirely remove such multi-function devices or simply disable their cryptocurrency modules. This ambiguity may lead to legal challenges or uneven enforcement until Spokane publishes detailed administrative guidelines.
Moreover, the council did not specify whether the ban applies to peer-to-peer (P2P) crypto vending services that use staffed booths or events (e.g., pop-up kiosks at fairs). The focus on “unattended” machines suggests a targeted approach, but without explicit language, enforcement agencies may err on the side of caution, potentially ensnaring legitimate, low-risk services.
Comparative Analysis: Other Jurisdictions and Global Trends
Spokane is not alone. In April 2025, Stillwater, Minnesota, became the first U.S. city to outlaw crypto ATMs, citing similar fraud patterns. Additionally, municipalities in Canada and Europe have enacted regulations requiring kiosk operators to obtain licenses, impose transaction caps, and adhere to strict anti-money-laundering (AML) protocols. For example, Ontario’s 2024 framework mandates registration with financial authorities, daily transaction limits of $3,000 for first-time users, and fee caps of 5% to protect consumers from exorbitant charges.
In Australia, federal regulators introduced requirements in early 2025 for all crypto ATM operators to integrate real-time identity verification (KYC) and refund mechanisms for fraud victims reporting losses within 90 days. These hybrid approaches aim to balance innovation and access while tightening loopholes exploited by scammers.
Implications for Users and Businesses
For Consumers
Without access to local crypto ATMs, Spokane residents may face higher barriers to entry when purchasing digital assets. Alternatives include:
- Centralized Exchanges: Platforms requiring online KYC and bank transfers. While safer, they exclude individuals without bank accounts or those uncomfortable with digital-only interfaces.
- Peer-to-Peer Marketplaces: Platforms like LocalBitcoins or Bisq enable direct trades but often require digital literacy and carry counterparty risks.
- Mobile Wallet Apps: Some mobile wallets offer in-app fiat on-ramps via integrated payment processors. Fees may be higher, and smartphone ownership is requisite.
Consumers must weigh convenience against security and choose reputable, regulated channels. Financial literacy programs and public education campaigns are vital to help residents navigate these options safely.
For Businesses
Kiosk operators face significant restructuring costs. Removing dozens of machines within 60 days entails logistical challenges, contractual obligations with landlords, and potential civil penalties. Many operators also run mixed-service kiosks; clarifications on compliance requirements will influence whether they pivot to alternative offerings or exit the market. Local retailers hosting machines may lose ancillary foot traffic, prompting negotiations with city officials for transitional accommodations or exemptions.
Moreover, financial-service startups eyeing Spokane must consider the regulatory landscape. Entities planning to deploy kiosks should engage proactively with policymakers, offering voluntary compliance measures—such as built-in fraud-alert systems or mandatory transaction caps—to demonstrate social responsibility and possibly negotiate a pathway for safe, supervised kiosk deployment.
Monitoring, Evaluation, and Future Policy Directions
The Spokane Police Department has been tasked with tracking reported incidents involving crypto kiosks over the coming year. Regular reports to the city council will inform whether the ban materially reduces scam rates or simply displaces fraud to other vectors. Data collection should include:
- Number of reported incidents pre- and post-ban.
- Aggregate dollar losses by scam type.
- Demographic breakdown of victims.
- Enforcement actions taken against non-compliant operators.
This evidence-based approach aligns with best practices in policy design, allowing Spokane to recalibrate regulations—potentially transitioning from outright bans to tightly regulated licensing regimes if data suggests hybrid solutions are effective.
At the state level, Washington legislators may consider pre-emptive frameworks to standardize crypto ATM operations, reducing the patchwork of municipal rules. Such legislation could mandate:
- Mandatory KYC onboarding for all users.
- Fee and transaction-size caps.
- Real-time transaction monitoring for red-flag activities.
- Clear victim-refund processes.
A collaborative, multi-stakeholder dialogue—including city councils, state regulators, law enforcement, consumer advocates, and industry representatives—will be essential to strike an optimal balance between innovation and protection.
Conclusion
Spokane’s unanimous ban on cryptocurrency ATMs represents a definitive stance on consumer protection in the digital-asset era. By ordering the removal of all crypto kiosks within 60 days, the city aims to shield its most vulnerable residents from a growing scourge of scams perpetrated through unattended machines. While this measure may restrict convenient on-ramps to DeFi and Web3 services, it underscores the primacy of public safety and financial integrity.
As Spokane implements and evaluates the ban’s effectiveness, stakeholders must remain agile: operators should explore compliant business models; policymakers should refine regulations based on empirical outcomes; and consumers must seek reliable, regulated channels to access digital assets. Ultimately, the lessons learned in Spokane could inform a model regulatory framework that protects citizens without extinguishing the transformative potential of blockchain technology.
