Minnesota is taking a hard stance against cryptocurrency kiosks, with a new bill introduced to ban the technology statewide due to a surge in crypto-related scams. The proposal, House File 3642, was presented by Representative Erin Koegel at a Thursday session of the Minnesota House of Representatives Commerce Finance and Policy Committee.
Koegel highlighted the “novel” and “minimally regulated” nature of crypto kiosks, which have become a target for scammers. She noted that while legitimate traders tend to use centralized exchanges, many fraudsters exploit the kiosks to trick residents into sending cryptocurrency. “Because of the nature of cryptocurrency, these fraudulent transactions are often irreversible and incredibly hard to track,” Koegel stated.
Legislative Efforts to Combat Scams
The state has already taken steps to address the issue. In 2024, Minnesota passed a law that set a $2,000 deposit limit for new kiosk users and required companies to issue full refunds for fraud victims. However, Koegel’s bill, if passed, would go a step further by fully banning crypto kiosks.
Sergeant Jake Lanz of the St. Cloud Police Department emphasized the growing concern, particularly among the aging population. “Within the past couple of years, we’ve definitely identified an issue with these Bitcoin ATMs, specifically in our jurisdiction. It is notable for us that it is definitely a target of our aging population,” Lanz said during the committee meeting.
Industry Response and Regulation
Minnesota has about 350 licensed crypto kiosks, operated by companies like Bitcoin Depot and Coinflip. The American Association of Retired Persons (AARP) reported in February that 17 states have laws requiring crypto ATM operators to implement protections against fraud, such as setting daily transaction limits and requiring fraud warning signs.
In response to potential misuse, Bitcoin Depot, one of the largest crypto ATM operators in the U.S., announced a new policy requiring ID verification for users with every transaction. The phased rollout, which began in February, aims to enhance security and combat fraud, although the company did not specifically mention state-level crackdowns.
Broader Implications for the Crypto Industry
The proposed ban in Minnesota reflects a broader trend of regulatory scrutiny on crypto kiosks across the United States. While some states are tightening regulations, others are exploring more lenient approaches to foster innovation and economic growth in the crypto space.
“This bill gives us an opportunity to work across party lines to protect the people of Minnesota from irreversible financial crimes,” Koegel emphasized, underscoring the bipartisan support for the measure. The bill’s progress will be closely watched by both regulators and the crypto community, as it could set a precedent for other states considering similar actions.
As the crypto industry continues to evolve, the balance between innovation and consumer protection remains a critical issue. The outcome of Minnesota’s legislative efforts will likely influence future regulatory decisions and the overall landscape of cryptocurrency adoption in the United States.
About the Author
