The city of Spokane, Washington has taken an unprecedented step in the battle against financial crime, becoming one of the first municipalities in the nation to ban cryptocurrency kiosks. The decision came after law enforcement officials presented compelling evidence linking these machines to a surge in scams targeting vulnerable residents.
I arrived in Spokane last Thursday, just as the city council voted 6-1 to prohibit these ATM-like machines that allow users to purchase Bitcoin and other digital currencies with cash. The atmosphere in the council chambers reflected the gravity of a decision that sits at the intersection of technological innovation and consumer protection.
“We’re seeing elderly victims losing their life savings,” Detective Stacey Carr told me during an interview at the Spokane Police Department. “Just last month, a 72-year-old retired nurse was convinced by a scammer to withdraw $18,000 from her retirement account and feed it into these machines.”
According to data provided by the Spokane Police Department, cryptocurrency-related fraud has increased 213% since 2021, with losses exceeding $2.7 million across 109 reported cases in the past year alone. The FBI’s Internet Crime Complaint Center confirms this isn’t just a local trend – their 2022 report documented over $2.57 billion in cryptocurrency investment fraud nationwide.
The council’s decision places Spokane at the forefront of a growing debate about cryptocurrency regulation at the local level. Councilman Michael Cathcart cast the sole dissenting vote, arguing the ban might push legitimate cryptocurrency users into neighboring jurisdictions while doing little to address online scams.
“These machines aren’t inherently criminal,” Cathcart said during the heated debate. “We’re potentially stifling financial innovation while scammers simply adapt their methods.”
His concerns reflect the complexity of regulating emerging financial technologies. The cryptocurrency industry has long operated in regulatory gray areas, with federal oversight developing more slowly than the technology itself.
Walking down Division Street the day after the vote, I counted three crypto kiosks within a four-block stretch. Outside one convenience store, I met James Weatherby, a 31-year-old tech worker who regularly uses these machines to purchase Bitcoin.
“This feels like punishing legitimate users for the actions of criminals,” Weatherby said, leaning against the machine that would soon be outlawed. “It’s like banning ATMs because bank robbers use cash.”
However, for Spokane Police Chief Craig Meidl, the issue is straightforward. “These machines provide perfect anonymity for criminals,” he explained during our meeting at police headquarters. “Unlike traditional banking, there’s minimal customer verification and transactions are virtually impossible to reverse once completed.”
The ordinance gives existing kiosk operators 60 days to remove their machines from city limits. Violations will result in misdemeanor charges and potential fines up to $1,000 per day of non-compliance.
Spokane’s approach differs significantly from states like New York that have implemented strict licensing requirements for cryptocurrency businesses rather than outright bans. The New York Department of Financial Services maintains some of the nation’s most robust cryptocurrency regulations through its BitLicense framework.
During my three days in Spokane, I witnessed firsthand the community divisions this decision has created. At a local tech meetup, entrepreneurs worried about the precedent the ban sets, while at a senior center across town, staff members shared stories of devastated elders who lost savings to sophisticated scammers.
“These criminals are incredibly persuasive,” said Eleanor Thompson, a social worker who counsels fraud victims. “They pose as government officials, tell victims their accounts are compromised, and direct them to withdraw funds and convert them to cryptocurrency as a ‘security measure.'”
The tactics Thompson described align with trends documented by the Federal Trade Commission, which reports that impostor scams frequently involve cryptocurrency payments precisely because they’re difficult to trace and nearly impossible to recover.
Cryptocurrency industry advocates like the Chamber of Digital Commerce have criticized Spokane’s approach as excessive. In a statement, the organization called for “targeted enforcement against criminals rather than technology bans that harm legitimate businesses and consumers.”
As I prepared to leave Spokane yesterday afternoon, workers were already removing the first crypto kiosk from a gas station on North Division Street. The machine, plastered with colorful Bitcoin logos and promises of “financial freedom,” was loaded onto a truck bound for Idaho, where no such restrictions exist.
What happens in Spokane may not stay in Spokane. Several neighboring municipalities are reportedly considering similar measures, and the Washington State Legislature is examining potential statewide regulations. Meanwhile, legitimate cryptocurrency users in Spokane must now travel to neighboring jurisdictions or rely exclusively on online exchanges for their digital currency needs.
The story of Spokane’s crypto kiosk ban illustrates the challenges facing communities as they grapple with rapidly evolving financial technologies and the creative criminals who exploit them. For now, the city has decided that protecting vulnerable residents outweighs the convenience of easy cryptocurrency access – a calculus that other municipalities across America will likely face in the coming months.
As Detective Carr told me while showing a wall of case files involving cryptocurrency scams: “We’re not against innovation. We’re against exploitation. Sometimes those lines blur, and that’s when difficult choices have to be made.”
