Cash-to-crypto machines, those ATM-like kiosks popping up in gas stations and convenience stores across Illinois, face new oversight under legislation advancing through the state government. These machines let people buy Bitcoin and other digital currencies with cash, but they’ve operated with minimal regulation until now.
The Illinois House recently passed a bill requiring kiosk operators to register with state financial regulators. This comes after concerns about money laundering and consumer protection grew louder in recent months. The legislation aims to bring cryptocurrency purchases under similar oversight as traditional money services.
“We’ve seen explosive growth in these machines without corresponding consumer safeguards,” says State Representative Marcus Thompson, who sponsored the bill. “People deserve basic protections when they’re putting their hard-earned money into these systems.”
The numbers tell the story of rapid expansion. Illinois now hosts over 1,800 cryptocurrency kiosks, ranking fourth nationally behind California, Florida, and Texas. Chicago alone saw a 300% increase in machine installations since 2020, according to industry tracking data from CoinATMRadar.
For many users, these kiosks represent the easiest way to enter the cryptocurrency market. Unlike online exchanges that require bank accounts and identity verification, the machines accept cash and provide immediate access to digital assets. This convenience factor has driven their popularity, especially among populations with limited access to traditional banking services.
Manuel Rodriguez, who operates a bodega on Chicago’s west side with a Bitcoin ATM, worries about the impact of new regulations. “My customers use this machine every day. Some send money to family overseas, others are investing for the first time,” Rodriguez explains. “More rules might make it harder for the regular person to use cryptocurrency.”
The proposed regulations would require operators to register with the Illinois Department of Financial and Professional Regulation, maintain transaction records, and follow anti-money laundering protocols. Fees for registration would range from $900 to $5,000 depending on the number of machines operated.
Industry representatives argue that most reputable kiosk companies already follow federal guidelines and self-impose security measures. CoinFlip, one of the largest operators headquartered in Chicago, implemented biometric verification and transaction limits years ago. “Responsible operators welcome sensible regulation,” says Daniel Polotsky, founder of CoinFlip. “Bad actors make the entire industry look dangerous.”
Law enforcement agencies have supported the legislation after several cases linked cryptocurrency kiosks to fraud schemes. The DuPage County Sheriff’s Office reported investigating over 30 cases last year where victims were directed to deposit cash into crypto ATMs as part of scams. Without transaction records, recovering funds proved nearly impossible.
Consumer advocates point to high fees as another concern. The average transaction at Illinois kiosks includes fees between 7-20%, substantially higher than online exchanges that typically charge 1-3%. The proposed legislation doesn’t address fee disclosures, though some lawmakers have suggested amendments to include such requirements.
Federal regulators have increasingly focused on cryptocurrency markets, with the Financial Crimes Enforcement Network (FinCEN) classifying kiosk operators as money services businesses since 2013. However, state-level oversight varies dramatically across the country.
Nebraska and Arkansas implemented similar registration requirements last year. Early reports suggest the number of machines decreased initially but stabilized as legitimate operators adapted to the new rules. Consumer complaints about fraudulent transactions dropped by 40% in Nebraska during the first six months after implementation.
The Illinois Senate is expected to vote on the bill before the legislative session ends in May. If passed, operators would have until January 2025 to register their machines and implement required security measures. Governor Pritzker has indicated support for the measure, calling it “a balanced approach to emerging financial technology.”
For Illinois residents, the regulations could bring more transparency to cryptocurrency purchases. Machine operators would need to clearly display their registration status and provide receipts with complete transaction details. Customers would also have access to state resources for filing complaints if problems arise.
The cryptocurrency industry continues to evol
