Hawaii Bans Cash-to-Crypto ATM Deposits Starting October 1

Hawaii has enacted a ban on cash-to-crypto kiosk transactions effective October 1, following FBI data showing 92 related complaints and $3.85 million in adjusted losses among state residents in 2025. The measure makes Hawaii the fifth state to restrict or prohibit cryptocurrency ATM operations this year, reflecting a rapid escalation in state-level oversight of an industry that has grown to tens of thousands of machines nationwide.

House Bill 1642, signed by Governor Josh Green on July 9 as Act 224, makes it unlawful for operators to own, manage, or operate any kiosk that accepts U.S. currency in exchange for a digital financial asset. Each prohibited transaction will be treated as a separate offense under Hawaii's consumer protection statutes. The state legislature passed the final version on May 6 before sending it to Governor Green for signature.

While some accounts have characterized the legislation as a blanket ban on all crypto ATMs, the enacted language specifically targets cash deposits used to acquire digital assets—not every service the machines provide. Operators may still run kiosks that accept cryptocurrency in exchange for another digital asset or for U.S. currency. Consequently, Hawaii residents will be unable to insert cash into a kiosk to buy Bitcoin or other cryptocurrencies, but they may continue selling crypto for dollars at eligible machines. The law also leaves unaffected the ability to buy, sell, or hold digital assets through online platforms that remain legally accessible in the state.

Scope of the Cash Deposit Restriction

Under Act 224, a "digital financial asset transaction kiosk" is defined as an electronic device capable of accepting or dispensing U.S. currency—via cash or payment card—in exchange for a digital asset. The definition carves out certain merchant rewards, assets used solely within online games, and securities registered or exempt under federal or Hawaii securities law.

Hawaii legislators zeroed in on the cash deposit function because fraudsters routinely instruct victims to withdraw banknotes and feed them into a kiosk. According to the legislature's findings, criminals frequently impersonate government officials, bank employees, tech support personnel, or company representatives, then walk victims through each payment step. Once a target reaches a machine, the scammer may stay on the line, provide a wallet address or QR code, and coach the victim past any operator-displayed warnings. After the transaction settles, criminals can move the digital assets through intermediary wallets or offshore platforms, severely diminishing the victim's prospects of recovering funds. The attraction for scammers is structural: unlike bank transfers or credit card payments, which consumers can sometimes dispute or reverse under federal protections, cryptocurrency transactions recorded on a blockchain are designed to be permanent and cannot be undone once confirmed.

The legislature referenced investigations conducted by the attorneys general of Iowa and the District of Columbia, which concluded that fraudulent activity represented a substantial proportion of transactions at certain operators. Those investigations pegged the fraud rate as high as 90%, though lawmakers noted the figure does not reflect every kiosk or transaction nationwide.

CoinATMRadar data indicated that Hawaii had 57 cryptocurrency ATMs and kiosks operating across its four main islands as of August 12, a small fraction of the more than 30,000 machines the tracking service records across the United States. Operators face an October deadline to either disable the affected deposit function or withdraw machines that accept dollars for cryptocurrency purchases.

FBI Data Details Hawaii Kiosk Losses at $3.85 Million

In May, the FBI's Internet Crime Complaint Center (IC3) reported that Hawaii residents submitted 92 complaints tied to cryptocurrency kiosks in 2025, resulting in approximately $3.85 million in adjusted losses.

At the national level, IC3 received 13,460 kiosk-related complaints accounting for $388.98 million in adjusted losses during the same year. Complaint volume rose 23% from 2024, while reported losses climbed 58%.

More than half of the 2025 complaints originated from individuals over 50 years old, with their combined reported losses surpassing $302 million, according to the bureau. The demographic data aligns with Hawaii lawmakers' findings that scammers disproportionately prey on older residents using urgent payment demands and impersonation tactics.

IC3 cautioned that its state-level totals encompass any complaint in which a cryptocurrency kiosk featured at some point in the fraud chain. A given case may also involve bank transfers, payment apps, or other transaction methods, meaning the full loss reported in a complaint cannot always be attributed solely to the kiosk.

Separate figures from the FBI's 2025 annual report showed that Americans filed 826 cryptocurrency-related complaints from Hawaii, with losses of roughly $80 million. Unlike the kiosk-specific table, this annual state figure spans multiple forms of crypto-enabled crime and should not be interpreted as a measure of ATM fraud alone.

For consumers, the bureau advises against sending cryptocurrency to anyone known only through phone or online contact. It also urges users not to scan QR codes provided by strangers or to send funds to callers claiming to represent a government agency, bank, or company without independently verifying the request.

State Crypto ATM Regulations Split Between Bans and Limits

Hawaii's approach is narrower than those of Indiana, Tennessee, and Minnesota, where state laws prohibit crypto kiosk operations outright rather than targeting only cash-to-crypto deposits.

Minnesota's statewide prohibition took effect August 1 after state authorities documented 134 complaints and nearly $1 million in losses over three years. Existing machines were required to cease processing transactions, and operators have until December 31 to remove publicly accessible kiosks.

Tennessee began enforcing its prohibition on July 1. Georgia opted for a different path on the same date, permitting the machines to operate under transaction caps, mandatory customer warnings, and refund obligations for certain fraud victims.

Indiana's ban had already taken effect in March. Lawmakers in Delaware and New Jersey have also advanced measures to prohibit crypto ATMs, though neither proposal had become law as of August.

Other states allow the machines but mandate licensing, warning screens, receipts, holding periods, daily transaction limits, or refunds in defined fraud scenarios. A state rule review published August 3 found that U.S. kiosk oversight ranges from complete prohibitions to jurisdictions lacking any dedicated regulatory framework.

At the federal level, crypto kiosk operators qualifying as money services businesses must register with the Financial Crimes Enforcement Network (FinCEN) and comply with Bank Secrecy Act obligations. According to FinCEN, those duties include maintaining an anti-money laundering program, transaction records, suspicious activity reports, and sanctions controls—but federal registration does not preclude states from layering on stricter operating requirements.

Enforcement: Each Transaction Counts as a Separate Offense

Hawaii codified the new provision in Chapter 481B of its Revised Statutes, which covers unfair and deceptive business practices. The law treats every individual cash-to-crypto transaction conducted in violation of the restriction as a distinct offense, rather than treating ongoing operation as a single violation.

The final enacted version eliminated any requirement for a complete machine shutdown where a kiosk can continue supporting permitted services. Operators may maintain crypto-to-cash withdrawals and exchanges between digital assets, provided they cease accepting U.S. currency from customers seeking to purchase cryptocurrency after October 1.

Source: CryptoNewsNet