In a bold move to initiate precautionary measures, Grosse Pointe Farms, a quaint suburb near Detroit, has established a local ordinance aimed at regulating cryptocurrency ATMs. This decision was prompted by a recent fraudulent incident that affected a neighbor from St. Clair Shores, demonstrating the increasing risks associated with crypto transactions.
This proactive approach aims to protect residents before any crypto ATMs are actually installed in the town by enforcing strict regulations that emphasize safety over convenience.
Ordinance to Mitigate Risks
During a recent city council meeting, officials voiced serious concerns regarding how effortlessly scammers could manipulate individuals—particularly the elderly—into unwittingly using crypto ATMs. Council member Lev Wood highlighted that the lack of transparency in these transactions makes residents prime targets for fraud.
The newly implemented rules stipulate that any potential crypto ATM operator must register with the Department of Public Safety. Furthermore, those managing these machines will be required to obtain a business license and ensure that clear warnings about fraud risks and the irreversibility of transactions are prominently displayed.
A significant aspect of this legislation is the imposition of limits on the amount new users can spend. Specifically, there will be a daily spending cap of $1,000 and a cumulative limit of $5,000 within the first 14 days of use. According to city attorney Bill Burgess, this initiative is intended to give newcomers the necessary time to familiarize themselves with the machines before engaging in larger purchases.
This proactive regulation mirrors actions taken in other states; Arizona, Nebraska, California, and Washington are similarly taking steps this year to implement restrictions or bans targeting specific crypto ATM operations.
Real-Life Impact: A Testimony from Coinflip
Representing Coinflip, a digital currency ATM provider from Chicago, Carson Gat attended the council meeting to share his experience. He recounted an incident where he successfully intervened to stop an elderly woman from falling victim to a scam at one of their ATMs.
Gat revealed that Coinflip is also contemplating similar user restrictions to mitigate fraud, noting that a majority of scams predominantly occur during a customer’s initial transaction. Operating in Michigan since 2019, Coinflip received its money transmitter license in April.
While supportive of the town’s new regulations, the company underscored the need for a careful balance between ensuring accessibility and promoting safety. Gat’s testimony notably reinforced the council’s conviction that these scams are not mere hypotheticals but prevalent problems in the community.
Growing Legislative Action on a Larger Scale
The initiative undertaken by Grosse Pointe Farms follows a statewide warning issued by Michigan Attorney General Dana Nessel, who alerted residents about the rising incidence of crypto ATM scams back in April. Nessel’s office has strongly advised the public to remain vigilant, especially when prompted to deposit funds under duress.
Featured image from Unsplash, chart from TradingView
