Michigan Town Proactively Curbs Crypto ATM Scams with New Ordinance

Grosse Pointe Farms, Michigan – In a pioneering move, the city council of Grosse Pointe Farms, a small community near Detroit, has unanimously passed an ordinance placing significant restrictions on cryptocurrency ATMs and their operators. This decisive action, taken despite the town currently having no crypto ATMs, aims to shield residents from increasingly prevalent scams.

The impetus for the ordinance stemmed from a report of a local resident falling victim to a crypto ATM scam in the neighboring town of St. Clair Shores. This incident followed statewide warnings issued by Michigan Attorney General Dana Nessel in April regarding the dangers of such scams, and local news coverage in the Detroit Free Press highlighting similar fraudulent activities.

Enhanced Transparency and Resident Protection

"The crooks tell people to go and put money into these machines, and it's a very untransparent situation," stated Councilmember Lev Wood during the council meeting. "What we want to do with our ordinance tonight is to enhance transparency and provide a little bit of help to our residents."

Council members noted that this makes Grosse Pointe Farms likely the first municipality in Michigan to proactively regulate crypto ATMs, setting a precedent for other towns to consider similar measures.

Key Regulations to Limit Transactions

City attorney Bill Burgess detailed four primary regulations for any future crypto ATMs operating within Grosse Pointe Farms:

• Registration and Licensing: Crypto kiosks must be registered with the Department of Public Safety, and their operators must obtain a business license.
• Mandatory Warnings: Machines must display prominent warnings and written consumer protection notices, alerting users to fraud risks and the irreversible nature of cryptocurrency transactions.
• Transaction Limits for New Users: For the first two weeks, new users will face a $1,000 daily transaction cap and a $5,000 aggregate limit. These restrictions are lifted after 14 days. "The idea is that someone at that point would become more familiar with the utilization of the machine," Burgess explained.

Industry Insights Support Caution

Carson Gat, a representative from Coinflip, a Chicago-based digital currency firm and ATM operator, attended the meeting to offer an industry perspective. He shared a personal account of preventing an elderly woman from being scammed, emphasizing that "the majority of these instances" of fraud occur during a new customer's first few transactions. Coinflip, which has operated in Michigan since 2019 and received its money transmitter license in April, has also explored implementing similar limits and holding periods on initial transactions.

This ordinance reflects a growing concern among local governments about the potential for financial exploitation through unregulated crypto ATM use, particularly targeting vulnerable populations.

July 2025, Cryptoniteuae