Minnesota bans cryptocurrency ATMs in response to growing fraud cases

Cryptocurrency ATMs started landing in grocery stores and gas stations a few years ago with a promise to revolutionize the way people use money.

Instead, the kiosks to convert cash into bitcoin or other virtual currencies became known to law enforcement and many users for eye-watering financial losses and predatory fees. After earlier attempts to protect consumers with transaction caps and mandatory disclosure fell short, Minnesota is taking a tougher approach: getting rid of them altogether.

Gov. Tim Walz signed a law on Tuesday, May 5, banning the machines from operating in the state. The measure garnered wide support among Republican and DFL lawmakers. Under the new law, operators are required to shut the kiosks down by August.

Authorities say the crypto ATMs have played a crucial role in elaborate fraud schemes many local police departments are unequipped to solve. The machines resemble traditional ATMs, but instead of dispensing cash, most only allow users to put cash in for the purpose of buying cryptocurrency, like bitcoin, on an exchange. Prosecutors claim the majority of transactions on many machines is fraud.

Minnesota becomes the third reported state to ban the machines entirely. Lawmakers in Tennessee and Indiana enacted bans earlier this year.

The new law in Minnesota only bans the kiosks. It does not restrict Minnesotans from using or trading cryptocurrency in other ways.

In fraud schemes involving crypto kiosks, scammers posing as government officials or tech support often call victims and convince them to withdraw a large sum of cash from their normal bank and then effectively wire it to the scammer by depositing it into a cryptocurrency ATM, which can put the money into an account the scammer controls. Often, law enforcement officials are unable to recover the money.

The machines, typically placed in gas stations, liquor stores and supermarkets, deposit into internet-based cryptocurrency accounts outside traditional banks, making the money nearly impossible to trace or recover.

Last year, attorneys general in Iowa and Washington, D.C., sued three large operators - Bitcoin Depot, CoinFlip and Athena Bitcoin - alleging 90% or more of the transactions at each company were fraud-based. The companies dispute that estimate.

Companies offering the service say most people interacting with their machines are using them for legitimate purposes. They say many do not have traditional bank accounts and want a quick, accessible way to convert their money.

In a statement, CoinFlip urged Minnesota to reconsider the ban, saying the company has worked in other states "to advance thoughtful, consumer-focused legislation that targets bad actors while protecting consumers' access to the digital economy and supporting responsible innovation."

The service is not cheap, and some users have a difficult time figuring out how much money an ATM operator collects in fees. The Iowa attorney general last year highlighted a $2,038.27 fee on an $8,800 Bitcoin Depot transaction that took several steps to calculate.

Several police department leaders and local elected officials supported the statewide ban and cited examples of cases where people were being swindled.

In Minneapolis, police opened an investigation involving a range of victims ages 18 to 66 years old who collectively lost nearly $19,000 at one of the 46 kiosks in the city. Those victims also reported being anxious, fearful and embarrassed after the con.

Minnesota Bureau of Criminal Apprehension Superintendent Drew Evans told lawmakers the machines presented "a disproportionate and escalating threat to Minnesota consumers" as the agency contended with a rising tide of cryptocurrency-related fraud. He said the state's financial crimes and fraud section witnessed growing challenges among fellow law enforcement agencies.

"Existing regulatory structures have proven insufficient to prevent misuse and fraud schemes and will likely never be able to keep pace with the increasing scope of fraud associated with them," Evans wrote in a letter supporting the law.

Minnesota's AARP also backed the ban, citing statistics from the FBI showing older adults are especially vulnerable to scams facilitated through the kiosks.

Several Minnesota cities including St. Paul, Apple Valley and Forest Lake took steps last year to eliminate or otherwise regulate the machines, following requests from local residents and police. In April 2025, Stillwater reportedly became the first to ban them.

Between 2023 and 2025, the Department of Commerce identified 120 complaints involving virtual-currency kiosks, resulting in nearly $1 million in losses. About 70 cases in 2025 led to more than $540,000 in losses investigated by the state. State regulators and law enforcement officials say many cases may go unreported.

According to the Commerce Department, a little less than half of victims received any refund, and those who received one got back about 16% of the original loss on average.

The state passed reforms meant to protect consumers in 2024. But those wound up being "fairly ineffective" as fraudsters found ways around transaction caps and required disclosure warnings, said Sara Payne, an assistant commissioner overseeing enforcement for Commerce.

"It became very clear to the department, to municipalities, to law enforcement, and to others that there is just no such thing as a safe crypto kiosk in Minnesota," Payne said.

Payne said the state has about 400 of the ATMs operating. Officials will be working with businesses to take them all offline by Aug. 1, she said, then have the machines physically removed from stores before a Dec. 31 deadline.

Payne said Minnesotans from all walks of life were targeted for crypto kiosk scams.

"Nobody was safe from these scammers," she said.

Scams reliant on the machines are also on the rise nationally. Losses across the U.S. amounted to $389 million last year, a 58% increase compared to 2024. Total complaints rose nearly 30% in that time.

After Stillwater and St. Paul banned the machines last year, industry leader Bitcoin Depot sued to block the bans. The Atlanta-based company claims to be the nation's biggest cryptocurrency machine operator, with more than 100 machines in Minnesota and 8,500 spread across the country.

Both lawsuits against the cities were voluntarily dropped this year as the state ban made its way through the Capitol. Bitcoin Depot did not respond to a request for comment.

Stillwater Mayor Ted Kozlowski said the ban led to phone calls from elected officials in other Minnesota towns and states like Oregon and Connecticut. He is happy to see Minnesota follow his city's lead in banning the kiosks.

"We knew it was kind of a David versus Goliath scenario," Kozlowski said. "We took a swing for the good of the people of Stillwater. And ultimately it worked."

"It's one of the most satisfying things I've done as mayor," he added.

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This story was originally published May 8, 2026 at 1:05 PM.