Proposed Ban on Virtual Currency ATMs in Minnesota
Minnesota lawmakers, with backing from local law enforcement and the Department of Commerce, have introduced House File 3642, which seeks to ban virtual currency ATMs statewide. This bill, sponsored by Rep. Erin Kogel, was presented on Thursday in the House Commerce, Finance and Policy Committee. If passed, it would not only outlaw kiosks that accept cash or debit cards for immediate virtual currency purchases but also repeal certain regulatory measures put in place in 2024.
The previous legislation mandated that operators display warnings that cryptocurrencies aren’t legal tender and that transactions are irreversible. It also set a daily purchase cap of $2,000 for new customers with accounts younger than 72 hours and required refunds for fraud victims who contacted the company and law enforcement within a two-week window. However, officials from the Commerce Department noted that scammers often find ways to bypass these protections, directing victims to use existing accounts or machines in nearby states like Wisconsin. Over the past year, the department received 70 complaints, reflecting losses totaling $540,000, but many cases likely go unreported.
Officer Lynn Lawrence from the Woodbury Police Department recounted a story about a victim living on a fixed income who ended up sending about half of his monthly earnings to a scammer through repeated Bitcoin ATM transactions over six months. “He was really worried about having to live in his car since he was left with no money,” Lawrence remarked. Sam Smith, the Commerce Department’s director of government relations, pointed out that prior attempts to bolster consumer protections for these kiosks have fallen short.
Larry Lipka, a representative from CoinFlip, one of the larger operators in the state, acknowledged that scams are a serious issue but opposed an outright ban on the kiosks. He argued, “It’s unfair to ban legit products just because fraud is occurring. We’re not to blame.” Currently, approximately 350 licensed cryptocurrency kiosks operate under eight to ten companies within Minnesota.
The National Context of Fraudulent Virtual Currency ATMs
The issue isn’t confined to Minnesota. Massachusetts Attorney General Andrea Joy Campbell recently filed a lawsuit against Bitcoin Depot, accusing the company of knowingly facilitating fraud that has led to over $10 million in losses for residents. Internal data indicated that in early 2023, 13 to 16 percent of their transactions were fraudulent, which later surged to over 50 percent in value from August 2023 to January 2025. A 2021 internal review found that around 90 percent of customers who engaged with a due diligence team appeared to be victims of fraud. The company responded, stating they disagree with the claims, are cooperating with law enforcement, and now mandate identity verification for transactions.
Maine recently reached a nearly $2 million settlement with Bitcoin Depot, which included a provision requiring the company to remove its kiosks from the state. Similarly, Kansas regulators have begun investigating virtual currency ATMs after a couple lost $20,000, having been deceived by a scammer posing as Apple Support. In West Virginia, the House Finance Committee proposed House Bill 5353, which aims to regulate businesses operating ATMs by implementing transaction limits and fraud prevention measures after local residents reported losses of $7.6 million in the previous year. AARP West Virginia supported the legislation, highlighting that individuals aged 60 and older accounted for over 85% of reported losses in 2024.
FBI statistics reveal a troubling trend, with about 11,000 complaints of crypto ATM fraud amounting to $247 million in 2024, which jumped to $333 million in 2025, not counting December. Yet, it’s worth noting that many victims remain silent, so the actual figure could be even higher.
The GrowinImportance of Preventing Fraud
Fraudulent activities involving virtual currency ATMs, especially targeting the elderly, have become a widespread issue across the United States.
The infamous “pig butchering” scam, employed by Asian criminal organizations, relies on forced labor to target victims. Scam facilitators engage in seemingly friendly interactions on dating apps, drawing targets into fake cryptocurrency trading platforms that promise significant returns. Once victims transfer money, the scammers vanish. The term refers to the manipulation of victims before extracting their resources. These virtual currency ATMs often appeal to older individuals, requiring only cash and a QR code.
A significant case has emerged involving a $13 billion dispute between the U.S. and China over Bitcoin. U.S. authorities seized 127,272 bitcoins, valued around $13 billion, linked to a Cambodian conglomerate as part of the largest asset forfeiture ever initiated by the Justice Department. Prosecutors connected the funds to pig butchering proceeds laundered through a mining pool, amid accusations from Chinese officials that the U.S. hacked the mining operation in 2020.
Recent reports from blockchain analytics firm Chainalysis indicate a surge in illegal activities, which reached a record level of approximately $154 billion in 2025. This represents a staggering 162% increase from a revised total of $57.2 billion in 2024, the highest figure since tracking began in 2020. Sanctioned nations like Iran and Venezuela have reportedly contributed significantly to this upswing, particularly via dollar-pegged stablecoins.
Federal Scrutiny on Cryptocurrency ATMs
The Digital Asset Market Transparency Act, also referred to as the CLARITY Act, is another federal initiative aimed at cryptocurrency ATMs. While the House passed it last year, a January Senate committee delay occurred as legislators worked to finalize the bill. Contentions over stablecoin regulations continue to be a contentious issue between conventional banks and the cryptocurrency sector.
The bill categorizes kiosk operators as money transmitters under the Bank Secrecy Act, obligating them to register their ATM locations with the Treasury Department quarterly. Additional stipulations involve mandatory disclosures, appointing compliance officers, verifying new customers’ identities, implementing short hold periods for large transfers, creating protocols for refund requests due to suspected fraud, and establishing customer service hotlines.
Concerns from Privacy Advocates
Financial privacy advocates express concern over these restrictions on crypto ATMs, viewing them as a crackdown on one of the few methods for moving money between dollars and cryptocurrencies that remain outside government oversight. Nick Anthony from the Cato Institute noted, “It’s disheartening to see people fall victim to scams at crypto ATMs… The real culprit here is the scammers, and they should be the focus of government action.”
Despite these concerns, decentralized peer-to-peer trading is likely to persist. Individuals with cash and smartphones can engage in informal exchanges, swapping dollars for cryptocurrencies directly without a centralized transaction database accessible to authorities. However, only committed individuals driven by ideology over practicality might venture down this path of maintaining privacy. More broadly, much of cryptocurrency activity is increasingly centralized around fintech companies and more manageable stablecoins.
