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 Representative Erin Koegel, in response to 70 official complaints of financial fraud totaling more than $540,000 in 2025, would ban the use of virtual currency kiosks or “crypto ATMs,” which also accept cash and debit cards.

The catalyst for the law 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 learned that she was giving away 50 percent of her monthly income to scammers, putting her on the verge of living out of her car.

According to law enforcement, scammers often target the elderly, using false identities and emotional stories to gain power over them and force them to give up their pensions or retirement savings.

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For scammers, the appeal of cryptocurrencies is obvious, as converting digital currency into cryptocurrencies makes it nearly impossible for law enforcement to trace the money and make arrests. But cryptocurrency platforms are protesting the ban, arguing that they are being unfairly punished.

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

“Scammers are vigilant. They’re horrible, and they’re stealing from Americans,” he told Gizmodo, before arguing that their existing security protocols, including transaction limits and holding periods, were adequate protections. “I know these tools work because we have 8,000 customers in the state, we have 12,000 transactions that took place last year and less than 1% of those were returned by customers.”

However, the Commerce Department does not agree. Sam Smith, director of government relations at the Commerce Department, points to the fact that only 48% of consumer complaints resulted in refunds, while those refunds averaged only 16% of the total fraud amount, as evidence that additional legislation is necessary.

To date, there are approximately 350 licensed cryptocurrency kiosks operating in Minnesota, but digital currency companies across the United States could be affected by the legal precedent set by this bill.

Subject
cryptocurrency scams