Minnesota lawmakers have introduced legislation that would impose a complete ban on cryptocurrency kiosks — commonly known as crypto ATMs or Bitcoin ATMs — across the state, marking one of the most aggressive regulatory moves against the machines in the United States as fraud complaints targeting elderly residents continue to rise.
House File 3642, sponsored by DFL Rep. Erin Koegel, co-chair of the House Commerce Finance and Policy Committee, was introduced February 23, 2026, and discussed in committee February 26. The bill prohibits anyone from "placing or operating a virtual currency kiosk" anywhere in Minnesota and would repeal the existing regulatory framework established in 2024, which included a $2,000 daily transaction limit for new customers, mandatory risk disclosures, a 72-hour cooling-off period and refund mechanisms for certain victims.
If passed, Minnesota would become one of the first — if not the first — U.S. states to enact a full statewide ban on physical crypto kiosks. The proposal follows testimony from local law enforcement and the Minnesota Department of Commerce highlighting a wave of scams, many involving "pig butchering" schemes where victims are tricked into transferring cash to kiosks for supposed cryptocurrency investments or emergencies.
Sergeant Jake Lanz of the St. Paul Police Department told the committee that crypto kiosks have become a primary tool for fraudsters, with cases often involving overseas actors draining savings from vulnerable older Minnesotans. One example cited during hearings involved an elderly victim losing $80,000 through repeated deposits at kiosks after being manipulated by scammers posing as trusted contacts. State officials reported millions in losses, with the elderly disproportionately affected.
The Minnesota Department of Commerce has strongly endorsed the bill, planning to introduce broader consumer protection measures in coming days. The agency has argued that existing safeguards have proven insufficient against sophisticated fraud, and a ban is the most effective way to eliminate the vector.
Crypto kiosks allow users to insert cash and purchase digital assets like Bitcoin, with operators charging high fees — often 12-25% or more. Proponents of the ban say the machines enable irreversible, hard-to-trace transfers that scammers exploit, particularly in "grandparent scams" or romance frauds. Critics of the industry note that many victims are instructed to use kiosks to send funds quickly, believing they are helping a loved one or investing legitimately.
The proposal has drawn support from law enforcement and consumer advocates, including AARP Minnesota, which has highlighted the disproportionate impact on seniors. No major opposition testimony was reported during the initial hearing, though industry groups could mobilize as the bill advances.
Minnesota's move fits into a broader national trend of tightening controls on crypto kiosks. In 2025, cities like Spokane, Washington, banned the machines locally, and states including California, Maine and Iowa imposed strict daily transaction limits (often $1,000) and fee caps. Vermont extended a moratorium on new kiosks through mid-2026. West Virginia advanced licensing and transaction-limit bills in February 2026, while Indiana considered a ban before weakening it to regulations.
Nationwide, the Federal Trade Commission and FBI have warned of escalating crypto-related fraud, with losses in the billions annually. Crypto kiosks, numbering around 34,000 in the U.S., are concentrated in convenience stores, gas stations and malls, making them accessible but vulnerable to abuse.
Industry representatives argue bans go too far, potentially stifling legitimate use for remittances, unbanked populations or quick conversions. They contend education, better operator compliance and federal oversight — rather than outright prohibition — would address scams more effectively. Some point out that kiosks are regulated as money transmitters in many states, and fraud often stems from external scammers rather than the machines themselves.
The bill's fate remains uncertain. It must advance through the House Commerce Finance and Policy Committee, then the full House and Senate before reaching Gov. Tim Walz. Minnesota's legislative session runs through May 2026, giving time for amendments or compromises.
Supporters hope the measure will protect vulnerable residents and set a precedent for other states grappling with similar fraud spikes. Critics worry it could push activity underground or limit access to digital assets in a state with growing crypto interest.
As hearings continue and public testimony mounts, Minnesota's proposed ban highlights the tension between innovation in digital finance and consumer protection in an era of rising scams.
Originally published on ibtimes.com.au
