Lawmakers in Minnesota are contemplating a significant shift in the state’s regulatory approach to cryptocurrency transactions, as a proposed bill aims to ban crypto ATMs entirely. The legislation, introduced by Rep. Erin Koegel, co-chair of the House Finance and Policy Committee, follows alarming reports of scams that disproportionately affect elderly residents.
The bill, HF 3642, would prohibit all physical machines in the state that facilitate the purchase of cryptocurrencies using cash, marking a pioneering effort in the United States to enact such a ban. This move comes on the heels of existing regulations implemented in 2024, which included a daily transaction cap of $2,000 for new customers, mandatory refund policies, and a licensing framework for ATM operators.
During a recent hearing, law enforcement officials highlighted increasing concerns about scams targeting older adults. Testimonies revealed disturbing incidents where some victims suffered significant financial losses. A local detective recounted a situation involving a resident who had mistakenly transferred Bitcoin to a scammer ten separate times over six months, jeopardizing her financial stability and leading her to seek government assistance.
In Minnesota, approximately 430 crypto ATMs are concentrated mainly in Minneapolis. Nationwide, the FBI reported that victims lost $333 million related to crypto ATMs last year, underscoring a broader issue that has caught the attention of regulators and law enforcement alike.
CoinFlip’s General Counsel, Larry Lipka, acknowledged the existence of scams utilizing their ATMs but noted that scammers employ various tactics that can be difficult to combat. A local police chief expressed frustrations over the challenges in recovering funds once transferred, illustrating the complexities of regulating this emerging financial landscape.
Rep. Keith Allen emphasized that millions of dollars have slipped away from rural communities, funds that could have otherwise contributed positively to local economies.
As Minnesota contemplates this total ban, other states are also taking steps to address the issue. Bitcoin Depot, the largest operator of Bitcoin ATMs in North America, recently announced it would require customers to present personal identification for every transaction. This decision follows legal action initiated by the Massachusetts Attorney General, who accused the company of enabling scams while failing to implement adequate fraud protections.
Despite the allegations, Bitcoin Depot asserts a commitment to compliance and consumer safety, pledging to collaborate with law enforcement in efforts to mitigate illicit activities associated with their machines.
As discussions progress in Minnesota, the outcome of this legislation could set a precedent for other states grappling with similar challenges in the evolving cryptocurrency landscape.
