Scam Sparks New Rules in Small Michigan Town
In a landmark move, Grosse Pointe Farms, a suburb just outside Detroit, has passed Michigan's first ordinance regulating cryptocurrency ATMs, responding to a surge in scam-related fraud. The catalyst came after a nearby resident was tricked into depositing cash into a crypto kiosk under false pretenses—a story all too familiar in a state seeing increased incidents of ATM-related crypto fraud.
In April, Michigan's Attorney General sounded the alarm, warning citizens about the dangers of crypto ATMs after several residents reported losing thousands of dollars in irreversible transactions. Now, with city-level legislation officially in place, local leaders hope to lead the charge in digital consumer protection.
Crypto ATM Use Curtailed With Protective Caps
The new ordinance, passed unanimously by the city council, introduces strict compliance measures. According to City Attorney Bill Burgess, operators must now register their machines with the Department of Public Safety and obtain a business license before installation.
To protect users—especially beginners—ATMs will now display fraud warnings and clear disclaimers about the irreversible nature of crypto payments. In addition, first-time users are limited to $1,000 daily and $5,000 across the first 14 days, after which the restrictions lift automatically.
The city hopes that this “cooling-off period” will give people time to understand the risks before committing larger sums
City Leaders Push for Transparency and Protection
Council member Lev Wood didn’t mince words during the meeting:
With unanimous approval, the ordinance reflected a strong local consensus that more guardrails are urgently needed in the evolving crypto landscape.
Crypto Industry Responds with Support
Surprisingly, crypto operators welcomed the added scrutiny. Coinflip, a leading U.S.-based crypto ATM provider, sent Carson Gat to represent the company, where he shared a personal anecdote about intervening to stop a scam in progress involving an elderly woman.
Gat emphasized that first-time users are consistently the most vulnerable, a sentiment echoed by Coinflip’s policy to impose similar transaction holds. Having operated in Michigan since 2019, Coinflip also secured a money transmitter license in April, aligning itself with the push for accountability.
He praised the ordinance as a model for the rest of the state and country:
Crypto ATMs: A Prime Target for Fraud
Crypto ATMs, commonly installed in gas stations, convenience stores, and malls, have become a favorite tool for scammers. Unlike traditional bank payments, crypto transactions are nearly impossible to reverse, giving criminals the upper hand.
Many of these machines are unmonitored, and victims often find themselves alone, confused, and with no immediate recourse. The combination of high-pressure tactics and the irreversible nature of blockchain transactions has made these kiosks particularly dangerous for the elderly and tech-inexperienced.
By becoming the first Michigan municipality to take decisive action, Grosse Pointe Farms may now serve as a blueprint for local governments nationwide looking to secure their residents from the dark side of crypto adoption.
