The suburban landscape of Sterling Heights, Michigan has become an unexpected battleground in the fight against cryptocurrency fraud. City officials this month unveiled comprehensive regulations targeting the growing network of cryptocurrency ATMs that have sprouted across strip malls and convenience stores throughout Macomb County.
The new regulatory framework, which took effect in early December, represents one of the most aggressive municipal responses to cryptocurrency-related consumer fraud seen in the Midwest. According to Sterling Heights Police Department data, residents lost approximately $1.7 million to cryptocurrency scams in the first three quarters of 2025 alone – a 43% increase compared to the same period last year.
“These machines were operating in a regulatory vacuum,” explained Sterling Heights City Manager Mark Vanderpool during the council meeting where the ordinance passed unanimously. “We’ve documented dozens of cases where elderly residents were talked into transferring their life savings through these kiosks by scammers posing as government officials or utility representatives.”
The proliferation of crypto ATMs – which allow users to purchase Bitcoin, Ethereum, and other digital currencies with cash – has accelerated dramatically in recent years. Industry tracker CoinATMRadar estimates Sterling Heights now hosts 37 such machines, up from just 8 in 2023, mirroring national trends that have seen the total number of U.S. crypto ATMs surpass 47,000 in 2025.
The Sterling Heights ordinance establishes a multi-layered approach to regulation. Machine operators must now obtain special permits costing $1,500 annually per device, undergo background checks, maintain comprehensive transaction records, and display prominent consumer warnings about common scams in multiple languages. Additionally, machines must be equipped with surveillance cameras and cannot operate between 10 p.m. and 6 a.m.
Perhaps most significantly, the regulations mandate a 30-minute transaction delay for first-time users and any transaction exceeding $1,000. This “cooling-off period” aims to interrupt what police describe as high-pressure scam tactics.
“The scammers keep people on the phone while they complete these transactions,” noted Detective Sarah Thompson of the Sterling Heights Police Department’s Financial Crimes Unit. “They create artificial urgency—claiming the victim’s utilities will be shut off immediately or that they’ll be arrested within the hour unless they pay through cryptocurrency. The delay gives people a chance to recognize something isn’t right.”
Local law enforcement has documented a troubling pattern: scammers specifically target immigrants and elderly residents, often exploiting language barriers and technological unfamiliarity. In one case highlighted during council deliberations, a 76-year-old Sterling Heights resident was defrauded of $43,000 after receiving a call from someone claiming to be from the Social Security Administration.
The crypto industry’s response has been mixed. The Cryptocurrency Compliance Cooperative, representing major ATM operators, has cautiously endorsed the Sterling Heights approach. “We support reasonable regulations that protect consumers while preserving access to financial innovation,” said consortium spokesperson Michael Haley. “The Sterling Heights ordinance, though stringent, follows the model we’ve advocated nationally.”
Others in the industry have expressed concerns about overreach. Bitcoin Depot, which operates several machines in the area, issued a statement noting that “excessive regulation risks driving cryptocurrency transactions underground where no consumer protections exist.”
Economic research suggests these concerns may have merit. A Federal Reserve Bank of Cleveland study published in September found that restrictive local regulations of alternative financial services often disproportionately impact underbanked populations. However, the study also acknowledged that crypto ATMs present unique regulatory challenges due to the irreversible nature of transactions and the anonymity they provide.
Sterling Heights isn’t alone in its regulatory push. Neighboring Warren implemented similar but less comprehensive measures earlier this year, while Detroit is currently drafting its own ordinance expected to be unveiled in early 2026.
City officials emphasize that their approach isn’t anti-cryptocurrency but rather targeted at preventing fraud. “We’re not trying to eliminate these machines,” said Councilwoman Barbara Ziarko. “We’re trying to ensure they’re operated responsibly and that our residents are protected from predatory scams.”
For Sterling Heights residents like Maria Kowalski, who lost $12,000 to scammers claiming to be from DTE Energy, the regulations come too late. “They kept me on the phone for three hours, threatening to cut off my electricity in December if I didn’t pay immediately through Bitcoin,” Kowalski recounted. “I’d never even heard of Bitcoin before that day.”
The Sterling Heights ordinance may serve as a template for other municipalities grappling with similar issues. The Michigan Municipal League has already requested documentation of the regulatory framework to share with other cities across the state.
As cryptocurrency continues its march into mainstream finance, the tension between innovation and consumer protection remains unresolved. For now, Sterling Heights has firmly placed its thumb on the scale of protection, signaling that the wild west days of unregulated crypto kiosks in suburbia may be coming to an end.
