Hawaii becomes first state to ban cash deposits at crypto kiosks

Hawaii is preparing to implement a sweeping Crypto ATM ban on Oct. 1, becoming the latest U.S. state to prohibit operators from accepting U.S. currency in exchange for cryptocurrency through digital asset kiosks.

The legislation, House Bill 1642, was approved by Hawaii lawmakers earlier this year and signed into law by Gov. Josh Green on July 9. The measure makes it unlawful to own, operate or manage a digital financial asset transaction kiosk that accepts U.S. currency from customers in exchange for digital assets.

The move places Hawaii alongside Minnesota, Tennessee and Indiana, which have also adopted bans or prohibitions targeting crypto kiosks. But Hawaii’s law is more precise than simply eliminating every function of a crypto ATM: machines can still facilitate certain transactions involving digital assets and U.S. currency, including cashing out cryptocurrency already held by a customer.

Hawaii targets a growing scam pipeline

The Crypto ATM ban comes as U.S. authorities continue to warn that cryptocurrency kiosks are increasingly being exploited by criminals.

According to the FBI’s Internet Crime Complaint Center, more than 13,400 complaints involving cryptocurrency kiosks were recorded in 2025, with reported losses exceeding $388 million. The FBI said both complaints and losses increased substantially from the previous year, while people over 50 accounted for more than half of the complaints and more than $302 million in reported losses.

The mechanics of these scams are often straightforward. Fraudsters impersonate government officials, law enforcement officers, investment advisers, technical-support representatives or other trusted figures. Victims are then instructed to withdraw cash and deposit it into a cryptocurrency kiosk, after which the funds are transferred to a wallet controlled by the criminal.

Hawaii lawmakers pointed directly to the problem when advancing HB 1642. The legislation cited FBI data showing that kiosk-related fraud had already produced hundreds of millions of dollars in losses nationwide.

The concern is particularly acute for older residents. AARP Hawaii has argued that cryptocurrency kiosks provide scammers with an easily accessible physical mechanism for collecting money from victims.

Craig Gima, AARP Hawaii’s communications director, described the machines as being used “like the getaway car in a bank robbery,” arguing that fraudsters use them to collect money after manipulating victims into withdrawing cash.

Lawmakers say consumer protection comes first

Supporters of the Crypto ATM ban say traditional cryptocurrency purchases remain available through exchanges and other digital channels, meaning consumers will not lose access to the broader crypto market.

Emma Olsen of Hawaii’s Office of Consumer Protection testified that prohibiting kiosks from accepting U.S. currency was viewed as an effective way to protect consumers. She also argued that most legitimate cryptocurrency purchases occur through licensed exchanges or bank-funded transfers rather than physical kiosks.

State Rep. Scot Matayoshi, who chaired the House Consumer Protection and Commerce Committee, was also a vocal supporter. Speaking before the legislation was enacted, he said the benefits to the relatively small number of consumers who prefer buying crypto with cash did not outweigh the scale of illicit activity associated with the machines.

The legislation does not prohibit all crypto-related kiosk activity. Under the enacted measure, operators cannot accept U.S. currency from a customer in exchange for a digital asset, while transactions involving one digital asset for another or selling digital assets for U.S. currency remain outside that specific prohibition.

That distinction is important because the law is aimed at the cash-to-crypto purchase mechanism most frequently associated with reported scams rather than cryptocurrency itself.

Operators warn of unintended consequences

Not everyone supports the Crypto ATM ban.

Crypto kiosk operators argued during legislative hearings that stronger regulation could address fraud without eliminating legitimate businesses. Chip Meyers, an operator in Hawaii, warned lawmakers that a complete prohibition could particularly affect people who are underbanked or have difficulty accessing conventional financial services.

Other industry representatives proposed alternatives such as transaction limits, enhanced customer disclosures, cooling-off periods for new users, wallet screening, stronger identification requirements and refunds for verified scam victims.

Hawaii lawmakers considered some of those approaches separately. Another measure, SB 2387, proposed safeguards including transaction limits, blockchain analytics, disclosures, receipts and dedicated customer-service and law-enforcement communication channels.

The debate highlights the larger regulatory question facing U.S. states: whether cryptocurrency kiosks should be eliminated because of their role in scams or subjected to tighter oversight designed to preserve legitimate access while making fraud more difficult.

For Hawaii, lawmakers have now chosen prohibition of cash-to-crypto purchases at these machines.

The state is therefore moving toward implementation of its Crypto ATM ban on Oct. 1, with operators facing a fundamentally different market environment once the law takes effect.

The Crypto ATM ban also sends a broader signal to the cryptocurrency industry: physical access points that make digital assets easier to buy can attract legitimate users, but they can also become powerful tools for criminals exploiting fear, urgency and unfamiliarity with crypto transactions.

With the deadline approaching, Hawaii’s decision could become another test case for U.S. policymakers weighing consumer protection against continued access to cryptocurrency services.