Minnesota has become the latest state to take decisive action against cryptocurrency ATMs, with Governor Tim Walz signing a bipartisan bill into law that will effectively ban virtual currency kiosks across the state.

The legislation, which garnered strong support from both parties, requires operators to cease kiosk operations by August 1, 2026, with all machines to be physically removed by December 31. This move addresses mounting concerns from law enforcement, regulators, and consumer advocates over widespread fraud facilitated by these machines.

Rising Fraud Losses Prompt Statewide Ban

State officials report that Minnesota residents have lost nearly $1 million to scams involving crypto kiosks over the past three years, with approximately half of those losses occurring in 2025 alone. The Department of Commerce documented around 120 complaints during this period, including 70 in 2025 that accounted for more than $540,000 in losses.

Scammers typically pose as government officials, tech support representatives, or other trusted figures, convincing victims—often older adults—to withdraw cash from traditional banks and deposit it into crypto ATMs. Once converted to cryptocurrency, the funds become nearly impossible to trace or recover due to the irreversible nature of blockchain transactions.

Industry Response and Previous Regulations

Operators such as CoinFlip and Bitcoin Depot, which runs around 110 kiosks in the state, have argued against a complete ban. They advocated for enhanced regulations including transaction limits, ID verification, fraud warnings, and data analytics to flag suspicious activity. CoinFlip emphasized that the machines themselves are not the perpetrators but tools misused by scammers, drawing parallels to fraud in traditional financial services.

However, state officials and lawmakers determined that prior consumer protection measures implemented in 2024 proved ineffective, as fraudsters adapted by splitting transactions and coaching victims to bypass warnings. Minnesota Bureau of Criminal Apprehension officials described the kiosks as presenting a "disproportionate and escalating threat" to consumers.

Local Actions and National Trend

Several Minnesota cities, including St. Paul and Stillwater, had already enacted local bans, prompting lawsuits from operators that were later dropped as the statewide legislation advanced. Minnesota joins Indiana and Tennessee, which passed similar bans earlier this year, in restricting these machines.

Rep. Erin Koegel, the bill's House sponsor, highlighted investigations in other states showing extremely high percentages of fraudulent transactions on certain kiosks. The AARP and local police departments strongly supported the ban, citing the vulnerability of older adults and the challenges in recovering funds once transferred to crypto wallets.

Impact and Future Outlook

The new law does not prohibit Minnesotans from buying, selling, or holding cryptocurrency through other means, such as online exchanges or traditional brokerages. It specifically targets the physical kiosk model, which authorities say has become a preferred channel for fraud due to its cash-to-crypto functionality and lack of robust oversight.

Businesses hosting the kiosks will work with regulators to ensure compliance with the shutdown timeline. While the industry maintains that many users employ the machines for legitimate purposes, including by unbanked individuals seeking accessible financial services, the scale of documented fraud ultimately outweighed those arguments in the eyes of Minnesota lawmakers.