Transaction restrictions and a full refund mechanism

The state of Arizona is moving towards enacting new regulatory legislation specifically targeting cryptocurrency ATMs to curb the increasing fraud exploiting this technology. This step follows reports of state residents losing approximately 177 million dollars due to fraud related to these devices, with the elderly being the most affected victims.

Approximately 600 cryptocurrency ATMs will be placed across the state under a strict regulatory framework, aiming to bridge the gap between ease of technology use and its risks.

Three protective mechanisms to regulate device performance

The new law aims to integrate the operation of cryptocurrency ATMs within a unified regulatory framework through three main defensive mechanisms:

• Setting maximum transaction limits:

• The maximum daily transaction limit for new users is set at $2,000.

• The transaction limit for current users should not exceed $10,500.

• Enhancing awareness of risks: The law requires operators of the devices to display clear warning messages and create a mandatory confirmation step for the user before completing the transaction.

• Establishing a refund mechanism: This provision is the most important, as it allows new users who fall victim to fraud to request a full refund within a 30-day period.

Targeting the elderly and the technical pursuit of scammers

Data indicated that scammers particularly target the less risk-aware groups, especially the elderly. Their methods often involve impersonating government employees or bankers, concocting false emergencies such as 'account issues' or 'financial reviews,' to push victims to transfer money through cryptocurrency ATMs. Losses for elderly victims have reached tens of thousands of dollars in a single transaction, which was the primary motivation for launching this legislation.

On a technical level, the law encourages operators to integrate on-chain analysis tools and to instantly tag suspicious wallet addresses. In the case of activating the risk model, the transaction is automatically intercepted and the data is sent to the state attorney general's office.

The law grants the attorney general's office exclusive enforcement powers that allow it to investigate directly with violating operators and impose hefty fines on them, to close the loop on monitoring and accountability.

The success of this experiment in Arizona is expected to serve as an important model for other states across the United States, aiming to transform cryptocurrency ATMs from a vague regulatory environment into a system that complies fully.

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