How do bitcoin ATMs work?

A bitcoin ATM is a kiosk that sells bitcoin for cash. A customer feeds in banknotes, and the machine sends cryptocurrency to a digital wallet. The machines charge much higher fees than online exchanges, and US authorities say they have become a major channel for fraud.

How does a bitcoin ATM work?

Despite the name, the machine is not connected to a bank account. A typical purchase has four steps:

1. The customer enters a phone number and, depending on the amount, scans a government ID.
2. The customer shows the machine a wallet address, usually as a QR code on a phone.
3. The customer inserts cash.
4. The operator sends bitcoin, minus its charges, to that address.

As with any crypto transfer, the sender cannot reverse a payment once it reaches a wallet.

What do they cost?

Kiosks are among the most expensive ways to buy cryptocurrency. Operators typically add a markup to the market price, sometimes with a flat charge on top. In lawsuits filed in February 2025, Iowa's attorney general alleged that two of the largest operators kept more than 20 percent of each transaction.

Are ID checks required?

In the United States, kiosk operators count as money services businesses. A notice issued on August 4, 2025, by FinCEN, the Treasury Department's financial crimes bureau, restated that they must register with it, verify customers' identities, run anti-money-laundering programs and report suspicious transactions.

Why are they linked to scams?

Kiosks give fraudsters a fast way to turn a victim's cash into crypto that is hard to recover. The Federal Trade Commission (FTC) reported in September 2024 that losses to scams involving bitcoin ATMs topped $110 million in 2023, nearly ten times the 2020 level. People aged 60 and over were more than three times as likely as younger adults to report a loss. The FBI's Internet Crime Complaint Center counted 13,460 complaints and about $389 million in losses for 2025, up 58 percent from the year before.

A caller or pop-up message poses as a bank, a tech company or a government agency and claims the target's money is in danger. The target is told to withdraw cash, go to a kiosk and scan a QR code supplied by the caller, which sends the money to the criminal's wallet. The FTC says no legitimate business or government agency will ever tell someone to pay or protect money through a bitcoin ATM. Other schemes are described in common crypto scams.

Indiana banned the kiosks in March 2026, Tennessee's ban took effect on July 1, 2026, and Minnesota's law set a start date of August 1, 2026. Other states have set daily transaction limits, licensing requirements or refunds for fraud victims. Rules differ by state and country and change often, so the state financial regulator is the place to confirm what applies locally.