Minnesota Lawmakers Consider Complete Prohibition of Cryptocurrency ATMs Following Fraud Concerns
State Representative Erin Koegel has introduced legislation seeking a complete prohibition of cryptocurrency ATMs throughout Minnesota, expanding upon previous 2024 state regulations that placed limitations on kiosk operators.
Legislation targeting virtual currency kiosks has been put forward by a state legislator in Minnesota following numerous reports detailing incidents connected to cryptocurrency-based fraudulent schemes.
During a Thursday meeting of the Minnesota House of Representatives Commerce Finance and Policy Committee, Representative Erin Koegel presented the bill, designated as House File 3642, which she described as addressing the "novel" and "minimally regulated" nature of cryptocurrency kiosk technology.
According to Koegel's testimony, state law enforcement officials had informed her that fraudsters frequently exploited these kiosks to deceive Minnesota residents into transmitting cryptocurrency, whereas authentic traders typically relied on centralized exchange platforms.
"Because of the nature of cryptocurrency, these fraudulent transactions are often irreversible and incredibly hard to track," said Koegel, adding:
"This bill gives us an opportunity to work across party lines to protect the people of Minnesota from irreversible financial crimes."
State lawmakers in Minnesota previously enacted legislation in 2024 designed to combat fraudsters exploiting virtual currency kiosks within the state. That legislation established a $2,000 deposit ceiling for first-time kiosk customers and mandated that operating companies provide complete refunds to victims of fraud. Nevertheless, should Koegel's proposed legislation be enacted, it would result in a total prohibition of the technology throughout Minnesota.
"Within the past couple of years, we've definitely identified an issue with these Bitcoin ATMs, specifically in our jurisdiction," said Sergeant Jake Lanz of the St. Cloud Police Department at the Thursday committee meeting. "[...] it also is notable for us that it is definitely a target of our aging population."
Based on House records, approximately 350 licensed cryptocurrency kiosks currently operate in Minnesota under the management of multiple companies, including Bitcoin Depot and Coinflip. Data from the American Association of Retired Persons published in February indicated that 17 states had established legal frameworks requiring cryptocurrency ATM operators to put in place safeguards against fraudulent activity, including the establishment of daily transaction ceilings and mandating the display of fraud warning notices.
Bitcoin ATM operator to require IDs for all transactions
Earlier this week on Tuesday, Bitcoin Depot, recognized as one of the nation's largest cryptocurrency ATM operating companies, revealed plans to institute a new policy mandating identity verification for customers conducting any transaction at its machines. The gradual implementation, which commenced in February, was designed to address "potential misuse," although the organization did not explicitly reference state-level enforcement actions targeting fraudulent operators.