New Regulations for Cryptocurrency ATMs in Grosse Pointe Farms
In a proactive move to safeguard residents, Grosse Pointe Farms—a small township located near Detroit, Michigan—has implemented new regulations governing cryptocurrency ATMs. The local city council convened on Tuesday, motivated by a concerning incident where a resident fell victim to a scam involving a crypto ATM in St. Clair Shores, a neighboring community. This issue gained further attention following warnings about the dangers of crypto ATMs issued statewide by Michigan Attorney General Dana Nessel in April. Reports by the Detroit Free Press have highlighted the ongoing scams related to these kiosks in the area, prompting the council’s action.
Details of the New Ordinance
The newly passed ordinance, which received unanimous approval from council members, is believed to be a pioneering effort in Michigan regarding the regulation of cryptocurrency ATMs. Councilmember Lev Wood remarked during the discussions that the purpose of these new rules is to improve transparency and support local users, who have often found themselves in dark and unreliable situations when using these machines.
“The crooks tell people to go and put money into these machines, and it’s a very untransparent situation,”
Wood stated, indicating the need for oversight in these transactions.
As outlined by city attorney Bill Burgess, the ordinance stipulates several essential criteria for future crypto ATM operations in Grosse Pointe Farms. Any kiosk must be officially registered with the Department of Public Safety and the operators are required to secure a business license. Crucially, the regulations mandate that these machines provide visible warnings regarding the risks of fraud and highlight the permanent nature of the transactions conducted. Additionally, new users will face restrictions on their transaction amounts, with a daily cap of $1,000 and an overall limit of $5,000 over the first two weeks of usage. After the 14-day introductory phase, these limits will be lifted to allow greater access to the users who have become more versed in operating the machines.
Community Support and Future Implications
During the meeting, Carson Gat, a representative from Coinflip—an operator of cryptocurrency ATMs—shared an anecdote illustrating the importance of these regulations. He recounted an instance where he intervened to help prevent an elderly woman from being scammed, affirming that the company is committed to implementing mechanisms that will place initial restrictions on new customers to reduce exploitation risks.
Since starting its operations in Michigan in 2019 and earning a money transmitter license as of April this year, Coinflip has witnessed a growing concern alongside other states, including Arizona, Nebraska, California, and Washington, which are also implementing measures to bring crypto ATMs under tighter control. Grosse Pointe Farms’ recent actions may set a precedent for other municipalities looking to tackle the increasing vulnerabilities associated with cryptocurrency transactions.
