Minnesota Lawmakers Push for Statewide Ban on Crypto Kiosks Amid Surging Scam Wave
ST. PAUL, Minn. — Law enforcement officials and state lawmakers are urging the Minnesota Legislature to impose a statewide ban on cryptocurrency kiosks, citing their role in a dramatic rise in scams targeting vulnerable residents, particularly seniors.[3][2]
During a February 26, 2026, hearing before the House Commerce Finance and Policy Committee, sponsors and supporters of House File 3642 (HF3642) presented compelling evidence of how these kiosks, which resemble traditional ATMs but facilitate cash-to-cryptocurrency conversions, have become tools of choice for fraudsters.[2][3]
A Growing Threat Exploited by Scammers
The scams follow a familiar script: Victims, often elderly individuals, receive urgent phone calls from imposters posing as FBI agents, IRS officials, or bank fraud departments. Claiming outstanding warrants, unpaid taxes, or account issues, scammers instruct victims to withdraw cash and deposit it into a nearby crypto kiosk to “resolve” the problem. Once converted to cryptocurrency and sent to the fraudster’s digital wallet, the funds are irretrievable.[1][3]
“The scammers are vigilant. They’re terrible and they’re stealing from Americans,” said one law enforcement representative, emphasizing the kiosks’ role in these irreversible transactions.[3]
Minnesota’s Department of Commerce reported a sharp increase in kiosk-related fraud, with local municipalities and police departments noting the machines’ proliferation in convenience stores and gas stations. The state currently hosts about 350 licensed kiosks operated by eight to 10 companies.[3][2]
Previous Regulations Fall Short
Minnesota enacted consumer protections in 2024 under Minnesota Statutes section 53B.75, requiring operators to issue refunds to new customers victimized by fraud, disclose terms and conditions, and cap daily deposits at $2,000 for first-time users.[3][4]
Despite these measures, fraud persists. Scammers have adapted by directing victims to kiosks in neighboring states like Wisconsin or using repeat customers to bypass limits. In St. Cloud, more than half of investigated cases evade the 2024 protections, while Woodbury victims have been told to cross state lines.[3]
Rep. Erin Koegel (DFL-Spring Lake Park), the bill’s sponsor, clarified that HF3642 targets only physical kiosks, leaving online cryptocurrency transactions unaffected. The amended bill prohibits anyone from placing or operating virtual currency kiosks statewide.[3][5]
Local Actions Pave the Way
Minnesota is not alone in its concerns. In November 2025, St. Paul became the first city in the state to ban the devices, citing disproportionate impacts on seniors and low-income residents. Spokane, Washington, followed a similar path in June 2025 with a citywide prohibition.[1][8]
Under Minnesota law, cities hold authority to regulate for public safety and welfare, allowing ordinances that exceed state minimums as long as they don’t conflict with higher laws.[4]
Nationally, 17 states have passed protections by 2025, including transaction limits, licensing, and warning signs. At least 15 states introduced bills this year mandating registration, risk disclosures, and anti-fraud safeguards.[1][8]
Industry Pushback and Alternatives Proposed
Crypto kiosk operator CoinFlip opposes a full ban, arguing that enhanced regulations suffice. Representative Brian Lipka highlighted their “cooling-off” period for new customers, which allows transaction reversals. CoinFlip reported just under 1% refund requests among 12,000 transactions from 8,000 Minnesota customers last year.[3]
“It is inappropriate to ban a legal product because fraud is happening. Not our fault,” Lipka stated, urging regulators to revoke licenses from non-compliant operators instead.[3]
Experts like Johnstone recommend kiosk-based safeguards: photo ID scans, selfie matching, mandatory 10-minute delays, and on-screen warnings like “law enforcement will never ask you to send crypto.” These could slow panic-driven transactions without elimination.[1]
Momentum Builds for Stronger Action
The Commerce Department strongly supports HF3642 and plans a broader consumer protection package incorporating the ban. “There’s growing momentum [that] reflects a shared recognition that stronger action is needed,” a department official noted during the hearing.[2]
The Federal Bureau of Investigation estimates significant national losses, with crypto kiosks exacerbating the issue. As the bill advances from its February 23 introduction, it faces a pivotal moment amid bipartisan concerns over protecting Minnesotans.[2][5]
While the regulatory path forward remains uncertain, the push underscores a broader reckoning with cryptocurrency’s dark side in everyday settings. Lawmakers must weigh consumer safety against innovation, with seniors and low-income groups bearing the brunt of inaction.[1]
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