Hawaii Bars Cash Buys at Crypto ATMs to Curb $240M Fraud Surge

Context On Monday the Hawaiʻi State Legislature passed House Bill 1642 CD1 with bipartisan support, which prohibits consumers from using cash to buy cryptocurrency at digital-asset kiosks, commonly called crypto ATMs. A crypto ATM is a kiosk that connects to a blockchain network and lets users exchange fiat cash for digital tokens or sell tokens for cash. The law still permits users to withdraw cryptocurrency they already own for cash at the same machines. Supporters say the rule targets a conduit that scammers use to turn victims’ cash into hard-to-trace tokens. The bill is expected to be signed by the governor within two weeks and will take effect 30 days thereafter.

Key Facts Nationally, cryptocurrency-scam caused about $240 million in losses during H1 2025, according to Representative Scot Z. Matayoshi. The measure aims to protect vulnerable groups, especially kupuna (elderly residents), who are often coerced into depositing large sums into these kiosks. Scammers frequently impersonate law-enforcement or court officials, creating a false sense of urgency to drive cash deposits. To curb abuse, the bill requires operators to keep transaction logs for at least five years and subjects violators to fines of up to $10,000 per incident. In the broader market, Bitcoin (BTC) traded at $27,300, down 2.1% over the past five days with a market capitalization of roughly $540 billion; Ethereum (ETH) stood at $1,850, down 1.8%, market cap near $220 billion. Coinbase (COIN) shares fell 3.4% to $78, valuing the exchange at about $20 billion, while Marathon Digital (MARA) rose 1.2% to $12.50, giving it a market cap of approximately $3.5 billion.

What It Means By removing the cash-in option, the bill cuts a direct path for fraudsters to convert illicit cash into crypto, though it leaves cash-out functionality intact for legitimate users. Industry analysts note that crypto ATM operators may see a dip in transaction volume, potentially affecting revenue streams for firms such as Coinme and BitAccess, though the exact impact remains uncertain. The legislation also directs the Hawaii Department of Commerce and Consumer Affairs to launch a public-awareness campaign focused on recognizing common scam tactics. Operators found non-compliant could face civil penalties and possible suspension of their licenses. Observers will watch whether other states adopt similar cash-in bans, how federal agencies respond to the evolving scam landscape, and whether the legislation reduces reported fraud losses in Hawaii’s quarterly consumer-protection reports.