ST. PAUL, Minn. (FOX 9) – ATMs that deal in cryptocurrency could be banned in Minnesota soon.

Crypto ATM ban considered

The backstory:

Police across the state are urging lawmakers to pass a DFL ban on those kiosks that convert cash to crypto.

They say the machines are used extensively by criminals trying to scam people or to hide the proceeds of their crimes. In 2024, lawmakers passed a law to regulate the machines. Still, last year Attorney General Keith Ellison warned of an increase in crypto ATM scams.

At a hearing last month, Faribault police reported their residents had lost $500,000 since 2022 from crypto ATM scams. Woodbury Detective Lynn Lawrence told lawmakers about a victim she helped who had completed at least ten Bitcoin transactions over six months at crypto ATMs. 

By the numbers:

Right now there are about 350 crypto kiosks in the state. They are often located in gas stations and grocery stores.

Their owners say this proposed law goes too far, but they’d support a law requiring full refunds for any customers who were victims of fraud.

How crypto ATMs work

Dig deeper:

Crypto ATMs allow users to turn fiat money into digital currency or vice versa. Users typically have to scan their identification to be able to use the machines and then the currency is sent to a wallet of their choosing.

However, the machines are increasingly used by scammers who convince elderly victims to use the ATMs to use the machines to send them money. Once the money is sent, it’s impossible to recoup the funds from the scammers.

Exchanges can blacklist scammers’ wallets and block them from withdrawing ill-gotten funds. However, most scammers will use “mixers” which wash the funds through a service that makes the coins hard to track or find ways around large exchanges like decentralized exchanges and peer-to-peer exchanges.

The other side:

At a hearing on Tuesday, Larry Lipka, counsel for digital currency platform CoinFlip, which operates 50 crypto ATMs in Minnesota, recognized scams are an issue, but pointed out scamming won’t disappear if crypto kiosks are banned.

“While I understand that scams are a problem, scams are a problem everywhere in this country,” said Lipka, “They are a problem for crypto kiosks, they are a problem for wire transfers, and they are a problem for gift cards. But no one is here today saying we should ban exchanges or gift cards or wire transfers because scammers use them.”

Instead of a ban, Lipka urged lawmakers to instead consider smarter and better controls for kiosks. According to Lipka, back in 2024, CoinFlip pushed for further protections when the previous crypto ATM bill was being discussed, arguing that legislation didn’t go far enough.