Minnesota Moves to Ban Crypto Kiosks Statewide

• Minnesota’s HF3642 proposes a full statewide ban on physical crypto kiosks amid rising senior scam losses.
• Scammers coach victims to bypass kiosk warnings and cross state lines, making the 2024 law easy to circumvent.
• Commerce Department data shows only 48% of victims got refunds, averaging just 16% of their total reported loss.

The use of crypto kiosks may become illegal in the state of Minnesota if the proposed ban is passed by lawmakers. 

House bill HF3642, introduced by Rep. Erin Koegel (DFL-Spring Lake Park), aims to make the use of physical cryptocurrency kiosks illegal due to an increase in scam-related losses.

Law enforcement officials testified Thursday before the House Commerce Finance and Policy Committee.

A Pattern of Exploitation Driving the Ban

Crypto kiosks have become a preferred tool for scammers targeting seniors across Minnesota. Woodbury Det. Lynn Lawrence wrote about a senior victim who lost 50% of her monthly income over eight months. 

She made at least 10 Bitcoin transactions before law enforcement stepped in at a gas station kiosk. The victim suffered from housing insecurity and was afraid of living in her car because of her depleted finances.

Adult Protective Services became involved given the severity of her circumstances. Lawrence noted she was already on a fixed income before the scam began draining her resources.

In a separate Woodbury case, a scammer held such psychological control over the victim that she questioned whether responding officers were real police. Victims are typically coached to input cash using an existing customer number at the kiosk. 

They are also instructed to bypass on-screen warnings that current state law requires operators to display.

Staggering Losses Pushing Legislators Toward Action

A 78-year-old woman in St. Cloud lost $80,000 in a scam that is directly related to a cryptocurrency kiosk. St. Cloud Police Sgt. Jake Lanz said in testimony that it is very hard to investigate cases like this. 

Money flows quickly through transactions that result in foreign countries beyond the local police department’s jurisdiction.

Faribault Police Chief John Sherwin told the committee that since 2022, the community has reported losses of over $500,000 related to kiosks. He estimates that this is only 25% of the actual losses. 

Rep. Keith Allen (R-Kenyon) calculated that figure could mean $2 million has left his rural community entirely. The Minnesota Department of Commerce received 70 direct complaints last year totaling $540,000 in losses alone. 

That number does not account for cases reported separately to law enforcement agencies statewide. Of those who filed complaints, only 48% received refunds, and those averaged just 16% of the total amount lost.

Why Current Laws Are Not Enough

Minnesota passed a law in 2024 setting a $2,000 deposit limit for new customers and mandating fraud victim refunds. 

Scammers responded by instructing victims to travel across the border to use kiosks in Wisconsin instead. Sgt. Lanz confirmed that more than half of St. Cloud Police cases now fall outside the 2024 protections.

Scammers also coach victims to make multiple smaller deposits to avoid triggering the new customer provision. 

They further direct victims to ignore on-screen disclosures built into the kiosk interface. Sam Smith from the Commerce Department told the committee that past consumer protection efforts for crypto kiosks have repeatedly failed.

Minnesota currently has 350 licensed cryptocurrency kiosks operated by eight to 10 companies statewide. 

The kiosks look like ATMs and enable the user to change cash or debit payments into cryptocurrency. The money is then stored in a digital wallet, which is controlled by the scammer and is untraceable.

Industry Resistance and the Road Ahead

CoinFlip general counsel Larry Lipka argued that kiosk operators are not responsible for scammer behavior. He said his company supports stricter regulation, including full refunds for all verified scam victims, rather than an outright ban. 

CoinFlip operates 50 kiosks in Minnesota and recorded fewer than 1% refundable transactions out of 12,000 last year. Lipka pointed to CoinFlip’s post-transaction hold period for new customers as an effective cooling-off measure. 

He urged the state to pursue license revocations against companies that fail to refund scam victims. Smith, however, maintained that the existing measures can be easily circumvented to ensure that incremental solutions cannot work.

Rep. Tim ODriscoll, a Republican (Sartell) indicated that both parties are striving to achieve a language agreement before the session ends. 

The bill was put by the committee to be considered again without being voted upon. Consumer protection concerns remain the driving force behind the push toward a potential statewide ban.