Complete Ban on Crypto ATMs Sought by Minnesota Lawmakers and Police

Minnesota lawmakers are proposing a ban on crypto ATMs statewide because of rising concerns over scams, which matters for local consumers seeking protection from financial fraud.

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This article explores the implications of the proposed legislation, the nature of crypto scams, and the ongoing regulatory landscape. It covers key aspects such as the motivations behind the ban, the impact on consumers, and comparisons of regulatory efforts across states.

This guide covers:

• The details of the proposed legislation
• Statistical insights into crypto scams
• Comparison of state-level regulatory responses
• The implications for consumers and operators
• The broader context of federal regulations

Minnesota lawmakers, supported by local police and the Department of Commerce, have introduced House File 3642. This measure aims to prohibit the operation of virtual currency kiosks that accept cash or debit cards for instant crypto purchases. It also seeks to repeal the regulatory framework established in 2024.

The previous law mandated operators to display warnings about the non-legal tender status of crypto and the irreversibility of transactions. It imposed a $2,000 daily limit on new customers who had held accounts for less than 72 hours. Refunds were allowed if fraud victims contacted the company and law enforcement within 14 days.

However, the Department of Commerce reported that scammers often bypass these protections. Victims are coached to use existing accounts or machines in neighboring states like Wisconsin. In the past year, 70 complaints were recorded, totaling $540,000 in losses, although most incidents remain unreported.

Woodbury Police Det. Lynn Lawrence described a victim on a fixed income who sent nearly half her monthly earnings to scammers through repeated bitcoin ATM transactions. “She was afraid she was going to have to live out of her car because she had no money left,” Lawrence stated.

Sam Smith, the Commerce Department’s government relations director, expressed concerns about previous consumer protection efforts failing. This highlights the ongoing challenge of protecting consumers in an evolving digital landscape.

As of 2026, the issue of scammers using crypto ATMs to target the elderly is prevalent nationwide. Massachusetts Attorney General Andrea Joy Campbell recently sued Bitcoin Depot, alleging it knowingly facilitated scams that caused over $10 million in losses for state residents.

Internal data from Bitcoin Depot indicated that 13% to 16% of transactions were scam-related in early 2023. This figure rose to over 50% of money volume through Massachusetts machines from August 2023 to January 2025. A 2021 internal review flagged that 90% of customers interacting with a due-diligence team were likely scam victims.

Despite these allegations, Bitcoin Depot claims to have cooperated with law enforcement and now requires identity verification for every transaction. In Maine, a settlement with Bitcoin Depot required the removal of all kiosks from the state, highlighting the growing scrutiny on crypto ATMs.

In 2024, the FBI reported nearly 11,000 crypto ATM scam complaints totaling $247 million. This figure climbed to $333 million in 2025, excluding December. The actual total is likely much higher due to underreporting.

The rise of “pig butchering” scams, particularly by Asian criminal syndicates, has industrialized the exploitation of victims. These syndicates use forced labor in countries like Laos, Cambodia, and Myanmar. They build relationships on dating apps to lure victims to fake crypto trading platforms.

Once victims send funds, the scammers vanish. The term “pig butchering” refers to fattening victims emotionally before extracting all their money. Elderly targets are often directed to crypto ATMs, which require only cash and a QR code, bypassing the need for online wallets.

One notable operation is linked to a billion bitcoin dispute between the U.S. and China. U.S. authorities seized 127,272 bitcoin from Cambodian conglomerate chairman Chen Zhi, marking the largest asset forfeiture in Justice Department history.

According to Chainalysis, illicit activity surged to record levels of approximately $154 billion in 2025. This represents a 162% increase from the $57.2 billion reported in 2024.

The Digital Asset Market Clarity Act, known as the CLARITY Act, also targets crypto ATMs at the federal level. Although the legislation passed the House last year, Senate committees postponed markups in January while negotiators finalized the bill’s language.

A draft bill from the Senate Banking Committee treats kiosk operators as money transmitters. This means they must comply with Bank Secrecy Act obligations and register kiosk locations with the Treasury Department quarterly.

Additional requirements include mandatory disclosures, appointment of compliance officers, identity confirmation for new customers, transaction limits, and a customer service helpline.

Financial privacy advocates argue that restrictions on crypto ATMs represent a clampdown on one of the few remaining avenues for trading between dollars and crypto without government surveillance. In a recent blog post, Nick Anthony from the Cato Institute stated, “It is heartbreaking that people are being tricked by scammers into sending money through cryptocurrency ATMs. However, the common denominator here is that scammers are the problem.”

Despite these concerns, decentralized peer-to-peer trading continues to exist. Individuals can exchange cash for bitcoin or other crypto assets informally without centralized databases. However, this method is generally pursued by those deeply committed to privacy, while the majority of crypto activity remains centralized around fintech companies and stablecoins.