As bill to ban cryptocurrency ATMs in Minnesota gets airing, local police departments back it

With cryptocurrency fraud a growing concern in Minnesota, a bill getting lawmaker attention at the Capitol would ban crypto kiosks statewide.

The House Commerce Finance and Policy Committee reviewed a bill Thursday to prohibit installation of the kiosks, sometimes called Bitcoin ATMs. The legislation was set aside for continued discussion later in the session, but lawmakers of both parties say they want to see at least some action taken this year to head off the scams that often target older people.

“We need stronger statewide action,” Lynn Lawrence, a detective for the Woodbury Police Department, testified at the hearing. She said scams tied to the machines are causing senior citizens and vulnerable adults to be drained of savings.

“If we don’t act decisively, these losses are only going to be grow,” she said.

A representative of one nationwide kiosk operator urged the Legislature to take a more measured regulatory and public awareness approach.

“It is inappropriate to ban a legal product because fraud is happening. Not our fault,” CoinFlip general counsel Larry Lipka told the committee. “We want to work with everybody. I understand the concern law enforcement has. When you are a hammer, all you see is nails.”

Lipka said the machines are the only way to purchase virtual currency with cash, so outlawing them would pose problems.

Minnesota has 350 licensed cryptocurrency machines, according to a state agency estimate.

Faribault Police Chief John Sherwin has seen firsthand how damaging these scams can be and joined Morning Edition to share why he’s in support of the legislation.

“They’re not only using vessels for legitimate purchases, but also for people that are scamming individuals and victims are using them to be victimized,” Sherwin said.

The success comes from creating a sense of urgency, Sherwin said, and is particularly targeting older people.

Since 2022, Faribault residents have lost an estimated $500,000 to cryptocurrency ATM scams, according to written testimony from the department. The average age of the victims is 68.

“The scammers aren’t using traditional methods where you would go to the bank and have a cashier's check or something. They are directing the victims to go to these crypto kiosks, and then they are giving them instructions on how to take care of this matter quickly,” Sherwin explained on MPR’s Morning Edition. “And what happens is, essentially, the victim transfers funds to a digital wallet, and then those funds are lost immediately through cryptocurrency.”

A St. Cloud police sergeant shared details of a case where a 78-year-old city resident made several crypto transactions after responding to a scam that she needed to send the money to get explicit material off her tablet.

“By end of it, she lost $80,000,” Sgt. Jake Lanz said.

Recovery of funds is difficult, if not impossible, because most of it flows to recipients overseas, the police officials told lawmakers.

The St. Paul City Council recently approved a ban on the kiosks that went into effect in December.

The bill proposing a ban on virtual currency kiosks, is sponsored by DFL Rep. Erin Koegel, who is co-char is the committee that reviewed the bill.

“We do want to make sure we are protecting Minnesotans. We know this is a sophisticated area,” she said. “We want to make sure that there are good guardrails in place before we let these folks into our state.”

CoinFlip, a Chicago-based digital currency platform with 50 kiosks in Minnesota, said in materials supplied to the committee that a regulatory framework is better than an outright ban. The company said it favors a combination of compliance by kiosk operators, visible fraud warnings to customers and analytics technology requirements to block transfers to high-risk digital wallets, among other regulations.

“The best defense for consumers is to be well-informed and well-alerted at the point of transaction,” its fact-sheet to lawmakers says. “The best defense for companies is to have the right tools in place to help identify and fight fraud and help law enforcement catch the bad actors.”

Lipka said CoinFlip has instituted some internal safeguards, too. Those include holding transactions for new customers for a period of time and ensuring that people who believe they were victimized can seek refunds. He said a ban will push the illicit activity to other kinds of scam.

Illinois, Maryland and Vermont are month the states that have recently passed new kiosk laws, although none have included an outright ban. Indiana lawmakers are on the cusp of becoming the first.

The Commerce Department in Gov. Tim Walz’s administration intends to present a broader consumer protection bill soon, which will include a call for a kiosk ban.

Sam Smith, the agency’s director of government relations, told the committee that a 2024 law meant to reduce the scams haven’t stopped growing problem. He said 2025 was the worst year for problems reported to the agency, although he said some people who are duped are too embarrassed to seek help from authorities.

“Fraudsters have easily circumvented these new consumer protections,” Smith said, adding, “Fraudsters rely on cryptokiosks because it is so challenging to recover stolen money.”

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