The biggest Bitcoin ATM operator in the US has begun phasing in a new requirement for users to provide identification for every transaction at its crypto ATMs amid increasing pressure from regulators and lawmakers for operators to curb illicit activity.
Bitcoin Depot said on Tuesday that it began the rollout earlier in February across the company’s US network ATMs, with the goal of helping to detect suspicious activity in real time and eliminate misuse by bad actors, such as account sharing, identity theft, and account takeover.
“Continuous verification allows us to detect suspicious activity based on customers, locations, or transaction amount before a transaction is approved,” Bitcoin Depot CEO Scott Buchanan said in a statement.
Bitcoin Depot implemented ID requirements in October, but only for all new users to its service. Buchanan said that “by requiring identity verification at every transaction, we are taking an additional step to strengthen security, protect customers, and maintain the integrity of our services.”
The US is the largest hub for Bitcoin (BTC) ATMs, with Coin ATM Radar listing 31,360 machines, accounting for 78% of the worldwide total. Bitcoin Depot is the market leader in the country with 9,019 kiosks.
Bitcoin Depot faces state-level lawsuits
Scammers have long used crypto ATMs as a way to receive funds from unwitting victims, as the kiosks are widespread and their transactions are irreversible, leading regulators and lawmakers to crack down on crypto ATM operators.
The advocacy organisation, the American Association of Retired Persons, reported in February that 17 US states have passed laws requiring crypto ATM operators to implement protections, including daily transaction limits, fraud warning signs, and licensing requirements.
Related: Crypto ATM limits and bans sweep across US: Here’s why
Bitcoin Depot has caught the ire of state regulators, as Massachusetts Attorney General Andrea Campbell sued Bitcoin Depot earlier this month, alleging the company has not implemented sufficient safeguards to prevent scams. Campbell is seeking a court order to bar Bitcoin Depot from processing large transactions without additional user protections.
In January, Maine Attorney General Aaron Frey reached a $1.9 million settlement with Bitcoin Depot to reimburse individuals who lost money to scams while using the company’s ATMs.
Last year, Iowa Attorney General Brenna Bird launched a lawsuit against both Bitcoin Depot and its rival Coinflip, alleging the operators failed to implement adequate protections to prevent scams.
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