Minnesota lawmakers are considering a statewide ban on cryptocurrency ATMs following a surge in scams targeting residents, particularly seniors. House File 3642, introduced by Rep. Erin Koegel, co-chair of the House Commerce Finance and Policy Committee, reached committee review on Thursday and aims to prohibit the operation of virtual currency kiosks and repeal existing regulations.
The proposed ban comes as law enforcement agencies report a growing number of incidents where scammers exploit these kiosks to steal funds. Detective Lynn Lawrence of the Woodbury Public Safety Department described a case where a woman on a fixed income lost half her monthly earnings over six months through repeated transactions initiated at the direction of scammers. “She was afraid she was going to have to live out of her car given that she had no money left,” Lawrence said.
Current Minnesota law, enacted in 2024, attempted to mitigate fraud by requiring kiosk operators to post warnings about the irreversible nature of crypto transactions, limiting initial deposits to $2,000 for latest users, and offering refunds to fraud victims who reported the incident to both the company and law enforcement within 14 days. Still, officials from the Minnesota Department of Commerce argue these measures have proven insufficient. Sam Smith, the department’s government relations director, told lawmakers that previous efforts “have failed,” and the department supports a complete ban, with plans to introduce broader consumer protection measures in the coming days.
Scammers are reportedly circumventing existing protections by instructing victims to utilize existing accounts or machines located in neighboring states like Wisconsin. The Department of Commerce recorded 70 complaints in the past year, totaling $540,000 in losses, but acknowledges that the actual number of incidents is likely much higher due to underreporting.
CoinFlip, a major crypto kiosk operator, opposes the proposed ban. Larry Lipka, a representative for the company, stated, “The scammers are vigilant. They’re terrible and they’re stealing from Americans,” but argued that banning a “legal product” due to fraudulent activity is inappropriate. Minnesota currently has approximately 350 licensed crypto kiosks operated by around eight to ten companies, including Bitcoin Depot and CoinFlip.
The issue extends beyond Minnesota. Massachusetts Attorney General Andrea Joy Campbell recently sued Bitcoin Depot, alleging the operator knowingly facilitated scams resulting in over $10 million in losses for state residents. Internal company data reportedly showed scam-related transactions accounting for 13 to 16 percent of all transactions in early 2023, rising to over 50 percent of money volume through Massachusetts machines between August 2023 and January 2025. A 2021 internal review indicated that 90 percent of customers interacting with one due-diligence team were likely scam victims. Bitcoin Depot disputes the allegations and says it has cooperated with law enforcement and now requires identity verification for all transactions.
Maine reached a nearly $2 million settlement with Bitcoin Depot, requiring the firm to remove all its kiosks from the state. Kansas regulators have also opened an inquiry into crypto ATMs following a case where a couple lost $20,000 after being directed by a scammer posing as Apple support to deposit funds into a kiosk in Johnson County. In West Virginia, a bill to license operators, set transaction limits, and mandate fraud protocols is advancing through the legislature after residents reported $7.6 million in losses in the prior year. AARP West Virginia supports the bill, noting that individuals aged 60 and older accounted for over 85 percent of reported national losses in 2024.
Federal data from the FBI shows nearly 11,000 crypto ATM scam complaints in 2024, totaling $247 million, increasing to $333 million in 2025 through November. However, these figures are also believed to be significantly underreported.
Authorities have linked many of these scams to sophisticated operations run by Asian criminal syndicates engaged in “pig butchering” schemes. These schemes involve building relationships with victims online before directing them to fake crypto trading platforms and ultimately coercing them into sending funds through ATMs. A $13 billion bitcoin dispute between the United States and China is linked to proceeds from such operations, with U.S. Authorities seizing bitcoin from a Cambodian conglomerate chairman allegedly involved in laundering funds through the LuBian mining pool.
Broader illicit activity involving cryptocurrency has also surged, reaching approximately $154 billion in 2025, a 162% increase from the previous year, according to blockchain analytics firm Chainalysis. Sanctioned nation states, including Iran and Venezuela, are reportedly driving much of this increase, particularly through the use of dollar-pegged stablecoins.
At the federal level, the Digital Asset Market Clarity Act, also known as the CLARITY Act, seeks to regulate crypto ATMs by treating operators as money transmitters subject to Bank Secrecy Act obligations. The bill, which passed the House last year, is currently stalled in the Senate due to disagreements over stablecoin regulation.
Privacy advocates argue that restrictions on crypto ATMs represent a broader clampdown on financial privacy. Nick Anthony of the Cato Institute contends that the focus should be on prosecuting scammers, not restricting access to a method of exchange. However, truly decentralized peer-to-peer trading remains an option for those prioritizing privacy, though This proves rarely utilized.
