Minnesota to Debate Ban on Crypto Kiosks After Scam Reports

Minnesota crypto kiosks could face a total statewide prohibition under legislation introduced by Representative Erin Koegel on Thursday. House File 3642 was presented during a session of the state House Commerce Finance and Policy Committee and aims to shut down what Koegel called a gateway for financial fraud.

Why Is Minnesota Considering a Crypto Kiosks Ban?

The proposed ban stems from mounting evidence that scammers exploit crypto kiosks to steal from Minnesota residents, according to law enforcement testimony. Koegel told committee members the machines represent "novel" and "minimally regulated" technology, and that legitimate cryptocurrency traders overwhelmingly prefer centralized exchanges.

"Because of the nature of cryptocurrency, these fraudulent transactions are often irreversible and incredibly hard to track," Koegel said during the hearing. She noted that multiple state law enforcement agencies had flagged the kiosks as a primary vector for scams.

Within the past couple of years, we've definitely identified an issue with these Bitcoin ATMs, specifically in our jurisdiction. It also is notable for us that it is definitely a target of our aging population.

— Sergeant Jake Lanz, St. Cloud Police Department

Existing Regulations and the Push for Stronger Action

Minnesota already enacted crypto kiosk legislation in 2024 that set a $2,000 deposit limit for first-time users and required operators to issue full refunds to fraud victims. Those safeguards have evidently not curbed the problem, prompting Koegel's bill to eliminate the machines entirely.

Roughly 350 licensed crypto kiosks currently operate across Minnesota, managed by companies including Bitcoin Depot and Coinflip, according to the state House. Their growing presence has coincided with rising scam reports, particularly those targeting elderly residents, law enforcement officials testified.

National Regulatory Landscape and Industry Response

The Minnesota proposal reflects a broader national trend of states cracking down on crypto ATM fraud. The American Association of Retired Persons reported in February that 17 states have enacted laws requiring crypto kiosk operators to deploy anti-fraud protections, including daily transaction caps and mandatory warning signage.

Bitcoin Depot, one of the largest crypto ATM operators in the United States, announced on Tuesday that it would begin requiring ID verification for every transaction at its kiosks. The phased rollout began in February as a response to "potential misuse," though the company did not specifically cite state-level legislative pressure.

What This Means Going Forward

If passed, House File 3642 would make Minnesota one of the most aggressive states in its approach to crypto kiosk regulation, moving from restrictions to outright prohibition. Industry operators like Bitcoin Depot appear to be responding preemptively with self-imposed compliance measures, but whether voluntary reforms will satisfy legislators remains an open question heading into the 2026 session.