Pennsylvania senators weigh consumer protections from cryptocurrency scams

This story was originally published by the Pennsylvania Capital-Star.

Millions of Americans fell prey to scammers in 2025, losing nearly $21 billion in cryptocurrency and artificial intelligence scams. It’s an ever-growing industry that takes advantage of society’s most vulnerable, according to the FBI.

In Pennsylvania last year, over 31,000 people lost $538 million.

An increasing number of those victims lose their money after withdrawing cash and depositing funds into scammers’ cryptocurrency wallets at an unknown number of kiosks around the state. Lawmakers hope that by regulating these ATM-like machines, they can protect Pennsylvanians. 

“As with all new technologies, we have a responsibility to ensure that these advances are not exploited by the bad actors that seem to pop up when new technology emerges,” said Sen. Pennycuick (R-Montgomery). “We don’t want to stifle innovation. We want to make sure that our policies keep pace with innovation and encourage progress, while protecting the consumers’ safety, privacy and confidence.” 

Pennycuick is the sponsor behind Senate Bill 1015, a proposal that would require virtual currency kiosks to display anti-fraud warnings and enhance their safeguards against financial exploitation. Operators would also need to establish a 24/7 customer service support line and obtain a money transmitter license. 

Two companies with machines in the commonwealth endorsed the bill as written, detailing before a Senate committee on Wednesday how their systems flag such abuse.

“We have a physical warning to start on every single machine,” said Chris Edwards, the assistant general counsel of Bitcoin Depot, which operates 462 kiosks throughout the commonwealth. 

“We ask folks, ‘Are you sending this Bitcoin that you’re about to purchase to a (digital) wallet that you own and control?’ … the only correct answer to that is ‘yes,’” continued Edwards. “If you answer ‘no,’ the transaction is cancelled and taken back to the start.”

Others recommended further action, saying the current effort would “markedly improve the regulatory market,” but that the machines served “no purpose.”

Paul Edger, a senior deputy state attorney general, said that the office’s Bureau of Consumer Protection had received 90 complaints specifically about cryptocurrency fraud totalling $12.3 million in losses. Of those, 85% of the victims were 60 or older. 

“Our office believes that kiosk operators know scams are occurring at dangerously high numbers and provide only minimal warnings for consumers,” said Edger. “As my office sees it, these kiosks serve no other purpose than for scam. I don’t see a legitimate purpose for these kiosks when an individual, in my opinion, can do (these transactions) online, through a computer, through their bank or through a legitimate service.”

In March, Indiana Gov. Mike Braun signed a bill banning the kiosks entirely, making it the first state to do so after lawmakers said they couldn’t think of “legitimate reasons” for their operation.

How Do the Scams Work?

According to new research from AARP, nearly four in 10 U.S. adults have already experienced fraud and millions more “are worried about becoming victims.” Though 82% of those surveyed could readily identify gift card payments as scams, just 19% could recognize a cryptocurrency kiosk. 

According to testimony, a victim might withdraw large amounts of cash from a bank and deposit it into someone else’s virtual wallet using a kiosk, instantly losing thousands of dollars that are nearly impossible to recover — all while on the phone with a scammer who talks them through the process. 

Teresa Osborne, the state advocacy director of AARP’s Pennsylvania chapter, said that any fraud estimates are likely an undercount, noting the shame many victims feel means many losses go unreported. 

“Until we collectively recognize that fraud victims are crime victims, we will continue to fall short in confronting fraud as the serious and pervasive threat that it is,” said Osborne. 

According to Osborne, roughly 1,000 Pennsylvanians called the AARP’s national Fraud Watch Network hotline, reporting losses of nearly $11 million last year.

Digital currency advocates say that kiosks give people the ability to convert cash into cryptocurrency like Bitcoin, Altcoins or Stablecoins. As adoption of these forms of currency increases, so too will the demand for kiosks, said Edwards.

“The original ethos behind Bitcoin was that it provides you the ability to move money using the Internet without involving a centralized intermediary,” said Edwards 

Edwards said consumers in cash-intensive industries gravitated toward cryptocurrencies, but that his company had a “robust compliance regime” for identifying bad actors and blocking their digital wallets. 

When asked specifically about illegal operations, such as laundering money used to purchase drugs, Edwards noted it’d be “a bad idea” to use their kiosks, which photograph each consumer and require a scanned driver’s license to use.

“We of course want to fight the fraud, but we want to do so in a way that allows legitimate business to continue to thrive and continue to exist,” said Edwards. “I think there are a number of smaller operators — and whether they’re bad actors or they just don’t have the ability to do some of these things that we’re doing, I don’t know. 

“But I think some of these smaller operators don’t necessarily have that robust compliance regime that we have built … and that makes a difference,” said Edwards. 

He pointed to an August 2025 report from the U.S. Treasury which reported that some kiosks don’t register with the proper banking authorities or advertise the ability to do transactions using only a phone number or email address. 

What Can Be Done To Protect Pennsylvanians?

Edger, with the state Office of Attorney General, said that many scammers worked overseas, making them difficult to find and prosecute. 

He called for more precise regulation on kiosks, requiring that anti-fraud warnings occur at multiple steps and “appear in large, unavoidable print.” 

Operators should collect more information before allowing someone to open an account and check it against publicly available services, he continued, while also identifying blacklisted wallets associated with criminal activity. 

He also recommended regulations for the owners of convenience stores, gas stations and bars hosting the machines, who he said received rent or other financial incentives, to place the kiosks in well-lit, highly visible locations with anti-fraud signage. 

“Stores should also be required to obtain mandatory training on how to spot a scam, as well as the authority to refuse access to a kiosk should the employee reasonably think a scam has occurred,” added Edger. 

While the Older Adult Protective Services Act includes some banking regulations, Edger said that “many” victims withdrew cash from their local financial institution before depositing into a cryptocurrency wallet and urged allowing banks to temporarily “freeze” suspect withdrawals. 

“We further recommend that if the transaction is temporarily frozen, that the bank immediately notify law enforcement to perform a welfare check on the consumer within 24 hours in order to speak with them and assist in stopping the potential scam,” Edger continued. 

Additionally, if someone using a kiosk is on the phone, Edger said the transaction should be denied. 

“In more than 95% of the consumer transactions reviewed by our office, the consumer engaged in a scam was on the phone,” he added.

Pennsylvania Capital-Star is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact Editor Tim Lambert for questions: info@penncapital-star.com.