Minnesota Weighs Ban on Crypto Kiosks After Scam Reports

A Minnesota lawmaker has introduced a bill that could ban virtual currency kiosks statewide after reports of scams tied to crypto ATMs. Bitcoin ATMs (CRYPTO: BTC) have emerged as a focal point in law-enforcement briefings, where operators have been accused of enabling irreversible transactions that are hard to trace. Rep. Erin Koegel unveiled House File 3642 during a Thursday session of the Commerce Finance and Policy Committee, arguing the technology behind crypto kiosks remains novel and minimally regulated. Minnesota voters have already seen a 2024 law intended to curb kiosk abuse by capping new-user deposits at $2,000 and requiring refunds to fraud victims, but Koegel’s measure would push toward a full ban if enacted. Supporters say it would shield residents from irreversible financial crimes, while opponents caution it could restrict access to legitimate crypto services and push activity underground. Koegel cited committee remarks and testimony during the session.

Key takeaways

• House File 3642 would ban crypto kiosks across Minnesota if enacted, expanding beyond the state’s 2024 safeguards.
• The 2024 law introduced a $2,000 deposit limit for new kiosk users and required refunds for fraud, signaling a trend toward consumer protections.
• Law enforcement officials described cryptocurrency kiosks as a common scam vector, with aging populations identified as particularly vulnerable groups.
• There are about 350 licensed crypto kiosks in Minnesota, operated by firms including Bitcoin Depot and Coinflip, according to the state’s findings.
• Industry responses emphasize a broader regulatory debate about crypto ATMs, privacy, and access versus fraud risk, with related moves like ID-verification policies signaling a shifting risk profile.

Tickers mentioned: $BTC

Sentiment: Neutral

Market context: The Minnesota proposal sits within a broader regulatory moment as lawmakers and regulators reassess crypto kiosks amid ongoing fraud concerns. Across the U.S., states are weighing standardized protections for crypto ATM users, while operators consider compliance measures to balance customer access with risk controls. The trend toward enhanced identity checks and clearer fraud warnings reflects a shift in how the market perceives the balance between innovation and consumer protection.

Why it matters

The bill’s momentum highlights a policy question at the intersection of financial technology and consumer protection. Crypto kiosks offer convenient access points for the public to buy and sell digital assets, but their relative lack of traditional safeguards has made them attractive targets for scammers. Minnesota’s current framework—enacted in 2024—was designed to curb abuse by imposing a deposit cap and mandating refunds for fraud victims. Yet the proposed HF 3642 would push the state toward a more restrictive approach, potentially banning the devices altogether. The stakes are not merely about kiosks; they reflect a broader debate about how to regulate rapidly evolving crypto infrastructure without stifling legitimate use cases or hindering access to digital assets for ordinary residents.

Industry responses point to a practical tension: operators argue that well-defined rules can reduce abuse while preserving access. Bitcoin Depot, one of the largest operators in the U.S., has already begun a phased rollout of ID verification for all transactions at its machines, a policy aimed at curbing misuse while maintaining user convenience. The move signals a willingness among some players to embrace stronger controls in the name of compliance and consumer protection; it also foreshadows a regulatory environment in which basic access could be contingent on identity verification and heightened disclosures. The pressurized policy backdrop is further amplified by consumer advocacy groups that emphasize protections, such as fraud warnings and transaction-limits, as essential to preserving trust in mainstream crypto usage.

For the market, these developments touch on liquidity, risk sentiment, and the perceived legitimacy of on-ramp infrastructure. When a state with tens (and potentially hundreds) of kiosks contemplates a ban, it underscores the fragility and scrutiny surrounding crypto-on-ramp channels. While the debates unfold, observers watch for how other states respond to similar concerns and whether broader federal or regulatory moves could harmonize or clash with state-level approaches. The tension between enabling convenient access to digital assets and preventing harms linked to fraudulent activity remains a defining feature of the current regulatory landscape.

In parallel, consumer protection narratives continue to gain traction. The American Association of Retired Persons (AARP) has highlighted ongoing fraud protections in several states, urging operators to implement practical safeguards such as transaction limits and clear fraud warnings. As lawmakers weigh HF 3642 against the potential benefits of accessible crypto tools for everyday users, the interplay between policy, technology, and consumer trust will likely shape the contours of Minnesota’s crypto kiosk ecosystem in the months ahead. The discussion also echoes broader policy conversations about how to regulate novel financial technologies while preserving opportunities for legitimate innovation.

The current environment therefore blends caution with pragmatism: protect vulnerable users and deter fraud, while acknowledging that kiosks can provide a straightforward entry point to digital assets for some residents. The outcome of HF 3642 remains uncertain, but the policy debate is unlikely to fade anytime soon as Minnesota and other states evaluate how to balance accessibility and security in an evolving crypto economy.

What to watch next

• Progress of House File 3642 in the Minnesota House of Representatives, including committee votes and potential floor action.
• Any Senate companion or changes in the legislative process that could influence the bill’s trajectory.
• Updates to kiosk regulations and enforcement actions stemming from the 2024 deposit-limit law, and any new operator compliance measures.
• Industry responses from crypto ATM operators regarding verification policies and fraud-prevention efforts, and how these may influence state debates.

Sources & verification

• House File 3642 and committee materials from the Minnesota House of Representatives (HF 3642 – Commerce Finance and Policy Committee materials).
• Committee hearing coverage and remarks, including Rep. Koegel’s statements and the discussion on the 2024 law, captured in the committee video (YouTube: https://www.youtube.com/watch?v=w6hc8OkvaZE).
• State data on licensed crypto kiosks in Minnesota (approximately 350 kiosks operated by Bitcoin Depot, Coinflip, and others).
• Bitcoin Depot policy update requiring ID verification for all crypto ATM transactions (Cointelegraph: https://cointelegraph.com/news/bitcoin-depot-mandatory-id-verification-crypto-atms).
• AARP’s guidance on crypto ATM fraud protections and related protections in multiple states (https://www.aarp.org/advocacy/crypto-atm-fraud-protections/).

This article was originally published as Minnesota Weighs Ban on Crypto Kiosks After Scam Reports on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.