Sterling Heights officials are proposing new rules for cryptocurrency machines to combat scams that have defrauded residents of over $542,000 this year. The City Council will review the ordinance on Tuesday, following 23 reported fraud incidents since January. The measures aim to protect vulnerable users, particularly seniors, from schemes involving Bitcoin ATMs and similar devices.
Sterling Heights, a city in Macomb County, Michigan, is addressing a surge in cryptocurrency-related fraud through proposed regulations on virtual currency machines, such as Bitcoin ATMs and kiosks. Since January 1, police have investigated or are investigating 23 cases, with victims losing at least $542,000. The average victim age is 64, highlighting risks to seniors.
Police Chief Andrew Satterfield explained common scams: victims often receive a computer virus alert, call a fraudulent number—typically answered from overseas—and are directed to deposit money at a specific kiosk. "Once the money is deposited, it's basically gone," Satterfield said. "It's really difficult to recover this." Another tactic involves online romance frauds, where scammers build false relationships and request funds, leading to thousands sent to strangers.
The ordinance, introduced on December 2, requires two readings and would limit new users to transactions under $1,000 per 24 hours. Machine owners and businesses must obtain licenses, undergo annual inspections, display licenses, and ensure an employee is present during operation. Users need access to a customer service hotline and must provide photo ID. Operators must maintain 90-day transaction logs for police review and post fraud warnings.
Councilman Michael Radtke, inspired by Grosse Pointe Farms' earlier regulations, prompted the review after learning of local fraud linked to kiosks. Sterling Heights would become the second Michigan city with such rules.
CoinFlip, operating three kiosks in the city, opposes aspects of the proposal. In a letter, Director of Government Affairs Jon Turke argued the $1,000 limit could encourage transaction stacking and hinder anti-money laundering efforts. The company complies with federal requirements, including ID for transactions over $1,000 and reports for suspicious activities above $2,000. CoinFlip supports statewide licensing and uniform disclosures but warns municipal rules could confuse consumers.
Satterfield and Radtke advocate for statewide regulation, noting local measures alone won't stop scammers directing victims elsewhere. The city plans to contact state representatives on the issue.
