Delaware and New Jersey have accelerated legislative efforts to ban cryptocurrency ATMs, joining a widening coalition of US states targeting the kiosks as primary vectors for financial fraud. The Delaware House Economic Committee passed House Bill 441 on Tuesday, advancing the measure to the full chamber to prohibit owning, installing, or operating any cryptocurrency kiosk. This action immediately followed a unanimous vote by the New Jersey Senate Commerce Committee on Monday to forward its own ban to the full legislative body. These developments mark a significant escalation in state-level regulatory responses, building upon total bans already enacted in Indiana, Tennessee, and Minnesota. The legislative momentum is driven by stark data indicating that these machines are disproportionately exploited for scams rather than legitimate trading. Data compiled by Woofun AI shows that the FBI received nearly 13,500 complaints regarding crypto ATMs in 2025, representing a 23% increase in reports and a 58% surge in financial losses totaling over $388 million compared to 2024 figures.

Notably, more than half of these complaints involved victims aged over 50, who suffered losses exceeding $302 million.

Cyndie Romer, the Delaware representative sponsoring the legislation, characterized the machines as reducing digital currency to a 'predatory cash grab' designed to exploit vulnerable populations. She highlighted a critical economic divergence between physical kiosks and digital exchanges, noting that regular traders avoid ATMs due to exorbitant fees reaching upwards of 20% of transaction value, whereas online exchanges typically charge between 0.4% and 1%. Romer argued there is no justification for supporting a business structure that facilitates extortion. Consequently, Delaware's bill extends beyond physical kiosks to ban fiat-to-crypto sales that 'replicate or substitute' ATM functions, including point-of-sale systems or cashier transactions. The legislation mandates the removal of all existing crypto ATMs within 90 days of enactment and establishes penalties of up to $10,000 for violations.

Furthermore, any operating kiosk discovered post-enactment must refund fees to all users or contribute to a consumer protection fund if users cannot be located.

New Jersey's parallel legislation adopts a similarly strict stance, prohibiting the ownership, control, installation, management, sale, or offer to sell of crypto ATMs due to a 'significant rise in scams associated with their use.' The state's penalty structure is tiered, imposing fines of up to $10,000 for a first offense and doubling the penalty to $20,000 for subsequent violations. This regulatory tightening follows a rapid succession of state-level bans, with Indiana becoming the first to enact a prohibition in March, followed by Tennessee in April and Minnesota in May. Beyond state legislatures, several US cities are weighing or have passed ordinances banning the machines, while states like Arizona and California have opted to cap transaction values rather than impose total bans. Woofun AI notes that this fragmented but aggressive regulatory landscape has already impacted market leaders, citing Bitcoin Depot, the former largest operator with over 9,000 kiosks, which filed for bankruptcy last month primarily due to regulatory pressure.

Despite the mounting legal challenges, crypto ATM operators maintain that they are not liable for criminal acts committed by third-party scammers using their infrastructure. Many operators have implemented on-screen scam warnings and self-imposed transaction limits to mitigate illicit activity. Bitcoin Depot previously stated in a December investigation by the ICIJ that it 'cannot be held liable for the criminal acts of third-party scammers,' asserting that its machines featured 'robust warnings and safeguards.' However, the legislative trajectory in Delaware and New Jersey suggests that voluntary safeguards are insufficient to counteract the perceived systemic risk. Woofun AI analysis suggests that the convergence of high fraud rates, predatory fee structures, and the targeting of elderly demographics has created an irreversible political consensus against physical crypto access points in these jurisdictions. As these bills move toward final passage, the industry faces a potential paradigm shift where physical liquidity nodes are effectively extinguished in favor of strictly regulated digital channels.