On February 27, 2026, a sharp debate erupted in Minnesota’s House Commerce Finance and Policy Committee over a proposal that could make the state the first in the nation to ban crypto ATMs outright. House File 3642, sponsored by Representative Erin Koegel, would prohibit the operation of virtual currency kiosks—machines that allow users to buy cryptocurrencies like bitcoin with cash or debit cards—across Minnesota. The measure comes after a wave of fraud complaints and mounting evidence that these kiosks have become a favorite tool for scammers, especially those targeting older residents.
This is not Minnesota’s first attempt to rein in the risks posed by crypto ATMs. Just two years ago, lawmakers passed a law requiring kiosk operators to post conspicuous warnings that cryptocurrencies are not legal tender, that transactions are irreversible, and that victims of fraud could obtain refunds if they contacted law enforcement and the company within 14 days. The law also imposed a $2,000 daily limit for new customers who had held accounts for less than 72 hours. But despite these safeguards, scams have continued to flourish.
According to the Minnesota Department of Commerce, there were 70 complaints last year alone, with reported losses totaling $540,000. "She was afraid she was going to have to live out of her car because she had no money left," Woodbury Police Detective Lynn Lawrence said, describing one victim on a fixed income who sent roughly half her monthly earnings to scammers over six months through repeated bitcoin ATM transactions. Authorities say these stories are just the tip of the iceberg, as most victims never come forward.
Law enforcement’s concerns are echoed by Sergeant Jake Lanz of the St. Cloud Police Department, who testified before the committee. He explained that scammers frequently direct victims—often older residents—to use crypto kiosks to send digital assets. The transactions are fast, nearly impossible to trace, and, once complete, the money is almost always gone for good. "Previous efforts to increase consumer protections for crypto kiosks have failed," Sam Smith, the Commerce Department’s government relations director, told lawmakers.
Currently, about 350 licensed crypto kiosks operate in Minnesota, run by eight to ten companies, including major players like CoinFlip and Bitcoin Depot. The machines’ widespread presence has made them increasingly visible in fraud investigations, raising questions about whether incremental reforms can ever keep up with the scammers. Representative Koegel, who introduced the ban, argued that crypto kiosks are minimally regulated compared to centralized exchanges, and that legitimate traders typically prefer online platforms. "Scammers exploit the speed and simplicity of these machines," she noted, framing the proposal as a necessary shift from regulation toward outright prohibition.
Industry representatives, while acknowledging the problem, are pushing back. Larry Lipka of CoinFlip told lawmakers, "The scammers are vigilant. They’re terrible and they’re stealing from Americans. It is inappropriate to ban a legal product because fraud is happening. Not our fault." Bitcoin Depot, another major operator, has responded to the scrutiny by rolling out mandatory ID verification for every transaction starting in February 2026, hoping to curb misuse of its machines. The company maintains that it has cooperated with law enforcement and disputes allegations that it knowingly facilitates scams.
But Minnesota is hardly alone in grappling with the dark side of crypto ATMs. Nationwide, the same pattern appears again and again. In Massachusetts, Attorney General Andrea Joy Campbell sued Bitcoin Depot earlier this month, alleging the company knowingly facilitated scams that cost state residents over $10 million. Internal company data cited in the lawsuit showed that scam-related transactions made up 13 to 16 percent of activity in early 2023, and a staggering 50 percent of money volume through Massachusetts machines from August 2023 to January 2025. In Maine, Bitcoin Depot settled for nearly $2 million and agreed to remove all its kiosks from the state. Kansas regulators are investigating after a farm couple lost $20,000 in a scam involving a caller impersonating Apple support. West Virginia, meanwhile, advanced House Bill 5353 to license operators, set transaction limits, and require fraud protocols after residents lost $7.6 million in the previous year. The American Association of Retired Persons (AARP) West Virginia chapter noted that people aged 60 and older accounted for more than 85 percent of reported national losses in 2024.
The scale of the problem is staggering. FBI figures show nearly 11,000 crypto ATM scam complaints in 2024, totaling $247 million in losses—a number that surged to $333 million in 2025, not even counting December. Yet, as regulators and law enforcement repeatedly stress, the real total is likely far higher, as most victims are too embarrassed or intimidated to report the crime.
Much of the fraud is driven by "pig butchering" scams, a term for elaborate cons run by Asian criminal syndicates. These groups, operating out of compounds in Laos, Cambodia, and Myanmar, use forced labor to build trust with victims, often through dating apps, before steering them toward fake crypto trading platforms. The platforms show phony profits, luring victims to send more money—often through crypto ATMs, which require nothing more than cash and a QR code. Once the funds are sent, the scammers vanish. The emotional and financial devastation is immense. In fact, U.S. authorities recently seized 127,272 bitcoin—worth about $13 billion—from Cambodian conglomerate chairman Chen Zhi, linking the funds to pig butchering proceeds laundered through the LuBian mining pool. According to blockchain analytics firm Chainalysis, illicit crypto activity hit a record $154 billion in 2025, up 162 percent from $57.2 billion in 2024. Sanctioned states like Iran and Venezuela have also driven much of the surge, especially via dollar-pegged stablecoins.
With the problem showing no signs of abating, policymakers at the federal level are also taking aim at crypto ATMs. The Digital Asset Market Clarity Act (CLARITY Act), which passed the House last year, would require operators to register kiosk locations with the Treasury Department, impose transaction limits, mandate fraud protocols, and treat kiosk operators as money transmitters subject to Bank Secrecy Act obligations. The bill remains stalled in the Senate, with disputes over stablecoin interest still unresolved.
Not everyone agrees that banning or restricting crypto ATMs is the answer. Privacy advocates warn that such measures would erode one of the last remaining ways to exchange dollars for crypto without government surveillance. Nick Anthony of the Cato Institute wrote, "It is heartbreaking that people are being tricked by scammers into sending money through cryptocurrency ATMs. However, the common denominator here is that scammers are the problem. That is who the government should be going after." He and others argue that the vast majority of crypto activity is now centralized around fintech companies and stablecoins, and that those who truly value privacy already trade peer-to-peer, far from the reach of regulators or kiosk networks.
For now, Minnesota’s House File 3642 remains under committee review, with lawmakers weighing the need for consumer protection against the desire to maintain access to digital assets. As the debate continues, one thing is clear: the battle over crypto ATMs is just beginning, and the outcome in Minnesota could set a precedent for the rest of the country.