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South Dakota is the latest state fighting back against scammers who use cryptocurrency kiosks to steal money from people unaware they are being targeted.

Automatic teller machines for virtual currency like Bitcoin are popping up all over the country but consumer advocates cautioned they are largely unregulated. A South Dakota Senate committee will take up a bill on Feb. 3 which would implement safeguards, including mandating licensing of the machines and providing receipts.

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Erik Nelson, associate state director of advocacy for AARP South Dakota, said cryptocurrency kiosks still allow for legitimate transactions but unfortunately, they have become a frequent tool for criminals.

"Overall, what we've learned is that right now, the vast majority of the transactions taking place on crypto ATMs are being used for scams and frauds," Nelson explained.

For example, an investigation in Iowa found 98 percent of transactions from one major operator were scams. In many cases, the person targeted is told their assets are in danger and that they can secure them by depositing the money into a crypto ATM. Currently, 22 other states have taken similar prevention steps. AARP reported cooperation from industry groups but lobbyists have pushed back against certain changes, namely daily withdrawal limits.

Nelson noted there are hopeful signs of the public becoming more aware of these scam threats, pointing to a recent example in South Dakota.

"In Sioux Falls last year, there was a banker that was not working, (who) was just buying something at a gas station (and) was able to stop one of these frauds from taking place because they recognized what was happening," Nelson reported.

AARP said there are more troubling examples than hopeful ones, including a 79-year-old woman who searched online for a phone number for Netflix assistance but instead got in touch with impersonators. The scammers persuaded her to send more than $250,000 through a virtual currency kiosk. The state Attorney General said in South Dakota, nearly $14 million in cryptocurrency-related losses were reported in 2024.