Executive Summary
The start of 2026 has brought a significant wave of state-level legislation targeting virtual currency kiosk operations. With at least 15 bills introduced across multiple states in January alone, the industry faces both regulatory challenges and opportunities.
Key takeaway: While several bills introduce new compliance requirements, many align with best practices already adopted by responsible operators. However, some provisions—particularly restrictive daily transaction limits and excessive fee caps—threaten legitimate economic activity.
Understanding the ALEC Model Framework
Throughout this analysis, we reference the ALEC model framework as a benchmark for evaluating state legislation.
What is the ALEC Model?
The American Legislative Exchange Council (ALEC) adopted the Virtual Currency Kiosk Consumer Access and Protection Act in November 2025. This model legislation provides a balanced framework that many state legislators are using as a template.
Core provisions include:
- Licensing: Operators must hold a valid money transmission license
- Transaction limits: $3,000 daily limit (adjusted annually for inflation)
- Location reporting: Annual reporting of all kiosk locations to state agencies
- Recordkeeping: Transaction records and law enforcement cooperation
- New customer protections: Enhanced protections during first five days
High Priority Bills
The following bills have the most significant implications for Bitcoin ATM operators and require immediate attention.
Moderate Impact Bills
Positive Development for the Industry
Complete Bill Summary
| State | Bill | Summary | Status |
|---|---|---|---|
| MI | HB5469 | Virtual Currency Kiosk Consumer Protection Act | House Committee |
| MI | HB5470 | Money Transmitter License Requirements | House Committee |
| MO | HB3043 | AG Civil Action Authority | Read Second Time |
| UT | SB0173 | Cryptocurrency Amendments | Senate Rules |
| VA | SB489 | Kiosk Operator Licensing | Senate Committee |
| VA | SB557 | Strategic Crypto Reserve Fund | Senate Committee |
| TN | HB1885 | Illegal Activity Amendments | Filed |
| TN | SB2136 | Illegal Activity Amendments | Filed |
| HI | HB1642 | Consumer Protection | First Reading Passed |
| UT | SB0155 | Unclaimed Property Amendments | Senate Committee |
| IL | HB4541 | Unclaimed Property Act | Filed |
| MD | HB549 | Public Ethics - Virtual Currency | House Committee |
| WV | HB4787 | Anti-Terrorism Act | House Judiciary |
| UT | SB0162 | Online Sales Tax Amendments | Senate Committee |
Federal Regulatory Landscape
FinCEN Notice FIN-2025-NTC1 (August 2025)
The Financial Crimes Enforcement Network's notice continues to shape regulatory discussions. FBI IC3 data showed over 10,956 complaints and $246.7 million in reported losses in 2024—a 99% increase from the prior year.
Key requirements: Registration as MSBs, robust AML/KYC programs, SAR filing for transactions over $2,000 involving potential criminal activity, and CTRs for transactions over $10,000.
Federal S.710 - Crypto ATM Fraud Prevention Act of 2025
This federal bill, sponsored by Senators Durbin, Blumenthal, Reed, and Welch, remains in the Senate Banking, Housing, and Urban Affairs Committee. Key provisions include quarterly location reporting to Treasury, enhanced disclosure requirements, and mandatory fraud warnings at kiosks.
Notably, the bill includes a provision allowing customers to request refunds within 30 days of reporting fraud—a measure that requires careful consideration of operational implementation.
Recommendations for Operators
- Benchmark Against the ALEC Model: Review operations against the ALEC framework. Meeting or exceeding these standards positions operators for compliance across multiple jurisdictions.
- Audit Compliance Programs: Review anti-fraud policies, customer service availability, fee disclosure practices, and blockchain analytics capabilities.
- Document Fraud Prevention: Maintain detailed records of fraud prevention measures, customer complaints, and SAR filings.
- Engage with Legislators: Provide industry perspective to bill sponsors and committee members. Reference the ALEC model as balanced regulation.
- Prepare for Licensing: If operating in states without current kiosk-specific requirements, compile licensing application materials.
Industry Perspective: Transaction Limits
While the ALEC model's $3,000 daily transaction limit represents a consensus approach, there is ongoing debate about whether such limits effectively prevent fraud or merely inconvenience legitimate users.
Scammers can direct victims to make transactions over multiple days or across multiple kiosks. Meanwhile, legitimate users converting tax refunds, insurance payouts, or business revenue face artificial barriers.
Enhanced protections for new customers during an initial verification period (such as a 72-hour new customer period) may represent a more targeted approach than blanket daily limits on established customers.
Conclusion
The wave of state legislation reflects growing government attention to the Bitcoin ATM industry. Clear, consistent regulation can provide operational certainty and legitimacy for responsible operators.
Operators who have invested in compliance infrastructure are well-positioned to thrive under reasonable regulation. The key is engaging constructively with legislators to ensure rules target actual harm rather than restricting legitimate economic activity.