What to know about the proposed crackdowns on crypto ATMs in Illinois

Illinois Gov. JB Pritzker wants legislation to address scams and money-laundering schemes facilitated through cryptocurrency ATMs, which convert traditional currency into cryptocurrency such as Bitcoin and vice versa.

Crypto ATMs have been in Chicago since 2014, but they are receiving more scrutiny as cryptocurrency has gained legitimacy under the Trump administration.

Unlike the bills in your wallet, cryptocurrency doesn’t have a set value. Instead, the “value of a dollar” is constantly changing. Bitcoin is the most popular of the new currency, but there are other types, like Ethereum.

The lack of centralization for cryptocurrency means that crypto payments do not come with legal protections and are typically not reversible. Crypto ATMs are not currently regulated by either the state or federal government. Pritzker wants to establish a daily transaction limit for crypto ATMs, cap exorbitant usage fees and require receipts showing the dollar value of digital assets and fees.

Here’s what you should know about crypto ATMs and the concern surrounding criminal activity.

Anthony Vazquez/Sun-Times

How many crypto ATMs are in Chicago?

In Illinois, there are more than 1,600 crypto ATMs — 1,167 of which are in Chicago. The machines are found at currency exchanges, convenience stores and gas stations.

Unlike a traditional ATM, crypto ATM users can buy cryptocurrency with traditional currency, like cash or a credit card. The user can send crypto to other people through the machine or exchange their crypto for traditional money.

How are crypto ATMs being used for scams and money laundering?

Because crypto is not overseen by the government or banks, it is easy to quickly move large amounts of money across borders. Crypto ATMs have helped drug dealers and human traffickers to launder money, officials say.

Scams involving crypto ATMs are also a concern. One popular scam is known as “pig butchering,” where criminals coax people to convert their cash and send crypto by posing as love interests. Other scams prey on older adults, asking them to send crypto to help a family member or pay a government debt.

While crypto transactions can be traced and tracked in ways that cash cannot, crypto ATM scam victims may not be able to recover their money.

In March 2023, Sonny Meraban, the founder and chief executive of Illinois-based Bitcoin of America, was accused of turning a blind eye to scammers who got their victims to send them cryptocurrency through the company’s ATMs.

Are crypto ATMs regulated in Illinois?

Last September, Illinois legislators proposed forcing operators to register crypto ATMs with the state and cap usage fees. However, the legislation died in the Senate without a vote.

State lawmakers said they were wary of regulating cryptocurrency because they thought the federal government should take the lead, and state regulations might provide a “stamp of approval” to an industry they don’t consider completely legitimate. However, if the federal government doesn’t do anything to regulate crypto, the Illinois General Assembly may take action to protect consumers.

What are Trump’s plans for cryptocurrency?

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In 2021, then-former President Donald Trump called Bitcoin a “scam,” but he’s since changed his mind. Last September, Trump announced a new cryptocurrency venture, World Liberty Financial, in a partnership with his two oldest sons.

Currently, there is no federal framework to regulate crypto. Companies that operate bitcoin ATMs must register with the Treasury’s Financial Crimes Enforcement Network, though not every firm follows the rules. However, states have used their own authority to attempt to control crypto transactions.

Now, Trump has promised to deregulate cryptocurrency in a push to grow the industry. Last month, he signed an executive order aiming to “support the responsible growth and use of digital assets, blockchain technology and related technologies across all sectors of the economy.”

Mendy Kong is a digital producer at WBEZ. Follow them @ngogejat.