An 82-year-old woman in McLennan County lost $15,000 at a crypto kiosk in 2023. Another family in Jasper County saw $25,000 disappear last summer. The machines look like ATMs but turn cash into cryptocurrency - digital money that moves fast and hides well. Texas regulators currently have no oversight over the kiosks.
An estimated 4,000 crypto kiosks sit in Texas convenience stores, gas stations and other businesses. They look like ATM-like machines. But roughly 70% of the people using them are over age 60, the group most vulnerable to scams.
The numbers keep climbing. Adam Colby, executive director of the Texas Financial Crimes Intelligence Center, put it bluntly: "Cryptocurrency kiosks serve no useful purpose, and no rational person would choose to use them, except for the purpose of hiding illicit funds."
Picture a phone call. Someone claiming to be a police officer or a bank employee tells a victim they owe money or face arrest. The scammer tells the victim to find a crypto kiosk located in places like a grocery store or convenience store.
Withdraw cash. Feed it into the machine. The cash is converted into cryptocurrency that is whisked away into unidentifiable crypto accounts.
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"The advantage of crypto is you can move money much faster without supervision," said Michael Levine, chief felony prosecutor for the Cyber and Financial Crimes Division of the Harris County district attorney's office. That speed is the problem. The Financial Crimes Intelligence Center estimates there is only a 36- to 48-hour window to recover the stolen money, which rarely occurs.
Maria, a 72-year-old Austin woman, almost fell for it. She drove to a kiosk with $5,000 in cash.
"I was a wreck the whole time. I was very nervous, very tense," she recalled. "And then when I walk in, I said, 'You're telling me it's this yellow thing?' and he says yeah. [But] that's a Bitcoin machine. I'm not putting any money there."
Most victims aren't so lucky.
Sheriff Chuck Havard of Jasper County wants tougher penalties. "I just think that, you know, these scammers, if we can catch them, I think the consequences should be very, very severe," he said.
Texas legislators are now studying the issue ahead of the 2027 session. State Rep. Mitch Little, R-Lewisville, heard testimony from law enforcement that "they needed to be banned." He said, "I think it seems to suggest that there are way fewer legitimate uses of these devices than you would expect."
State Rep. Cole Hefner, also a Republican, went further. "From the law enforcement experts in the room, I don't see any reason to be regulating them. "Based on their testimony, based on their experience, [kiosks] serve no other purpose but money laundering or scamming folks, and we just need to get rid of them"."
But Texas tends to avoid heavy-handed rules. Little acknowledged the tension. "Texas, as a predominantly Republican, conservative state, generally lets the market solve its own problems, and I'm very sensitive to that. "I don't think we should just step in and ban things because we don't like them or we're worried about them or they're a novelty … but it's pretty obvious we have a problem"."
Meanwhile, recently both the Texas House and Senate have held committee hearings related to the kiosks, following directives to explore possible solutions and regulatory approaches. During late June, several East Texas legislators from the House and Senate gathered with the Financial Crimes Intelligence Center to talk about potential ways to regulate the machines. Hefner noted that either he or another lawmaker will move to ban the kiosks in the upcoming session.
Without state legislation, local rules are a patchwork. The 2027 Texas Legislature will decide whether to regulate, restrict, or ban the machines outright.
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