With Massachusetts considering new rules for cryptocurrency ATMs, Marblehead officials are taking a closer look at whether to regulate the machines locally as police statewide report a rise in scams tied to digital-currency kiosks.
The state’s Joint Committee on Financial Services heard hours of testimony last week on a proposal that would, for the first time, require cryptocurrency kiosk operators to register with the state, post fraud warnings and set daily transaction limits. It would also require kiosk operators to refund victims of fraudulent transactions.
State Rep. Jenny Armini, D-Marblehead, who supports the legislation, said it represents a case of “the law needing to catch up with technology.”
“This is essentially another kind of ATM,” Armini told the Current. “So if this is another kind of ATM, it needs to be regulated. There’s no reason why cryptocurrency should be any more available than regular currency.”
Select Board Chair Dan Fox said the issue hasn’t yet surfaced as a major concern locally, but the board is gathering information.
“We are in conversations with legal counsel discussing our options about regulations and what that would look like,” he said. “Everything’s on the table… anywhere from making them register as well as possible potential bans.”
Fox said officials want to protect seniors and other vulnerable residents while allowing legitimate operators to continue if possible.
“We’d like to take a preventative approach as opposed to waiting for something bad to happen,” he said. Any local action, he added, would need approval at the Town Meeting after legal review, police input and coordination with other communities.
Within Marblehead, police say they’ve seen a steady stream of cryptocurrency-related scams.
Earlier this year, a local teenager helped stop an elderly woman at Richdale on Smith Street from falling victim to a Bitcoin ATM scam.
“We field a number of calls regarding cryptocurrency being related to scams throughout town,” said Detective Theresa Gay. “Whether or not those machines are actually in town or whether they’re directed to go to another place depends on the fact pattern, but we certainly deal with this often.”
Gay said the department receives about five to 10 such reports a month, noting that the shift to cryptocurrency mirrors how scam tactics have evolved.
“What used to be scams where victims would be directed to buy gift cards have turned into scams where victims are directed to go to specific cryptocurrency machines in the area,” she said.
Tracking those cases, she added, is difficult and time-consuming. “Those machines aren’t owned by criminals themselves; it’s just the criminal enterprises directing the usage of those,” Gay said, highlighting that cryptocurrency transactions are particularly hard to trace because once the money is sent, it disappears almost instantly.
The department is still working to identify exactly how many cryptocurrency ATMs are in town, she said, and urged residents of all ages to stay vigilant and contact police if they suspect a scam. To prevent fraud, Marblehead police have partnered with local businesses and banks to post warnings and train employees to recognize red flags.
At the State House hearing, law-enforcement officials described these machines as “the Wild West” of financial fraud and urged lawmakers to impose limits and consumer protections. Essex County District Attorney Paul Tucker, whose office covers Marblehead, urged lawmakers to act quickly, calling the kiosks a “payment portal for scammers.” His office has investigated more than two dozen cases, many involving elderly victims, but said the problem is vastly
underreported because victims often feel shame or embarrassment.
“At this very moment, someone is being scammed,” Tucker said. “There’s no doubt that someone is being scammed.”
According to the FBI’s Internet Crime Complaint Center, losses tied to cryptocurrency kiosk scams jumped 99% nationwide last year from 2023, reaching about $247 million. Tucker said Massachusetts has between 650 and 800 crypto ATMs, many in gas stations and corner stores.
Ethan McClellan, director of government relations for Bitcoin Depot, the world’s largest crypto-kiosk operator, spoke against the stricter clauses outlined in the bill. He said low transaction limits and fee caps would effectively drive legitimate operators out of Massachusetts while failing to curb scams.
McClellan urged lawmakers instead to focus on licensing, clear disclosures and stronger compliance measures to protect consumers.
Some communities, including Waltham and Gloucester, have already passed local ordinances banning crypto kiosks, while Danvers is considering similar measures.
Armini said Marblehead leaders could consider local action if the machines become a problem.
“If Marblehead is experiencing enough of a problem, then the Select Board would probably be a faster route to solving it,” she said, noting that the state’s legislative process can be “slow and deliberative.”
Fox said Marblehead will keep researching options but emphasized education as one of the best defenses.
“The more that people are aware, the less likely they are to be scammed,” he said. “It’s not always about regulations but about making sure people understand what’s out there.”
