Why Minnesota lawmakers are trying to ban crypto ATMs

In a joint effort between Minnesota lawmakers, local law enforcement, and the Department of Commerce, legislation has been introduced to ban crypto ATMs across the state in response to widespread fraud and financial abuse, particularly of the elderly. 

Bill HF3642, sponsored by Rep. Erin Koegel, would prohibit the use of virtual currency kiosks or "crypto ATMs," that also accept cash and debit cards, in response to 70 official complaints of financial fraud totalling over $540,000 in 2025.

The catalyst for the legislation was a single incident in which police officers responded to a call about a senior citizen who appeared confused at a gas station cryptocurrency kiosk. Upon further investigation, police discovered that she had been giving 50 percent of her monthly income to scammers, leaving her on the verge of having to live out of her car.  

According to law enforcement, the scammers often target the elderly, using false identities and emotional stories to gain power over them and coerce them into parting with their pensions or retirement savings. 

For scammers, the appeal of cryptocurrency is obvious, since converting digital currency into cryptocurrency makes it all but impossible for law enforcement to trace the money and make an arrest. But cryptocurrency platforms are opposing the ban, arguing that they’re being unfairly punished.

Larry Lipka, in-house counsel at digital currency platform CoinFlip, acknowledges the problem but opposes the proposed legislation.

"The scammers are vigilant. They’re terrible, and they’re stealing from Americans," he told Gizmodo before arguing that their existing safety protocols, which include transaction limits and a holding period, were sufficient protection. "I know that these tools work because we’ve got 8,000 customers in the state, we have 12,000 transactions that happened in the last year and less than 1% of those were refundable by customers."

The Commerce Department, however, disagrees. Sam Smith, government relations director at the Department of Commerce, points to the fact that just 48% of consumer complaints resulted in a refund, while those refunds averaged just 16% of the total fraud amount, as evidence that additional legislation is necessary.

As of now, approximately 350 licensed cryptocurrency kiosks operate in Minnesota, but digital currency companies across the United States could be affected by the legal precedent this bill sets.