The city of Sterling Heights, Michigan has taken a bold step in the fight against digital currency fraud with its recently announced cryptocurrency protection ordinance set to take effect in early 2025. The measure, which city officials call the first of its kind in the state, aims to shield residents from the growing wave of crypto-related scams that have cost Americans billions in recent years.
During last week’s city council meeting, Sterling Heights Police Chief Dale Dwojakowski presented the ordinance alongside Mayor Michael Taylor, highlighting the urgent need for local intervention against sophisticated digital currency schemes targeting vulnerable community members.
“What we’re seeing isn’t just isolated incidents anymore,” Dwojakowski explained. “These scams have evolved from random attempts to highly targeted operations that deliberately prey on our residents, particularly seniors and those unfamiliar with cryptocurrency technology.”
The ordinance creates a specialized crypto fraud investigation unit within the Sterling Heights Police Department, establishes mandatory reporting requirements for financial institutions operating in the city, and implements a community education program focused on digital asset safety.
According to FBI data referenced during the presentation, cryptocurrency scams resulted in over $5.6 billion in losses nationwide during 2023, with Michigan residents accounting for approximately $114 million of that total. Sterling Heights itself recorded 37 cryptocurrency fraud cases last year, with victims losing an average of $42,000 each.
The most common scheme reported locally mirrors national trends – romance scams that gradually introduce investment opportunities in fake cryptocurrency platforms. Victims are typically shown fabricated returns on initial small investments before being encouraged to contribute larger sums, which are then stolen.
“What makes these cases particularly devastating is that victims often liquidate retirement accounts or take out loans, believing they’re making legitimate investments,” said Sterling Heights City Attorney Marc Kaszubski, who helped draft the ordinance. “By the time they realize it’s a scam, the money is virtually unrecoverable.”
The new law includes several innovative provisions that caught the attention of both crypto industry observers and municipal governance experts. Most notably, cryptocurrency ATM operators within city limits must now register with the police department, display prominent fraud warnings in multiple languages, and implement advanced identity verification measures beyond what federal regulations currently require.
Local businesses that accept cryptocurrency payments must also provide customers with standardized disclosure forms explaining transaction irreversibility and common fraud warning signs.
Critics, including some cryptocurrency advocates, have questioned whether a city-level approach to cryptocurrency regulation creates an uneven regulatory landscape that might ultimately prove ineffective against sophisticated international scammers.
“While well-intentioned, this fragmented regulatory approach could create compliance headaches without meaningfully protecting consumers,” said Anthony Pompliano, a prominent cryptocurrency investor and commentator, when asked about Sterling Heights’ initiative. “Crypto fraud is a national and international issue that likely requires federal coordination.”
Mayor Taylor addressed such concerns directly, emphasizing that the ordinance focuses primarily on education and victim support rather than creating burdensome regulations.
“We recognize our limitations as a municipality,” Taylor said. “This isn’t about regulating the technology itself, but rather equipping our residents with knowledge and our police department with resources to address the human element of these crimes.”
The city has already secured a $375,000 federal grant to fund the specialized police unit and community education campaign for the first two years. The unit will include two full-time detectives with specialized training in blockchain analytics and digital forensics, working in coordination with the FBI’s Michigan Crypto Crime Task Force.
Perhaps the most innovative aspect of the ordinance is its victim support program, which will provide free counseling services and financial recovery planning for those affected by cryptocurrency scams. The city has partnered with local financial institutions to create educational workshops specifically designed for seniors and other vulnerable populations.
For Sterling Heights resident Eleanor Krupczak, who lost nearly $65,000 in a cryptocurrency investment scam last year, the new ordinance represents a meaningful step forward.
“When it happened to me, I didn’t even know where to report it or what to do,” Krupczak shared during the public comment portion of the meeting. “Having a local resource that understands these scams would have made all the difference.”
As other Michigan municipalities watch Sterling Heights’ implementation closely, the ordinance could serve as a template for similar local efforts nationwide. While federal regulations around cryptocurrency continue to evolve slowly, cities and counties increasingly find themselves on the front lines of consumer protection in the rapidly changing digital assets landscape.
The Sterling Heights crypto fraud law takes effect January 15, 2025, following a year-long implementation period during which the city will develop educational materials, train personnel, and establish reporting systems for the initiative.
