Minnesota's ban on new crypto ATM installations took effect Saturday after state officials said residents lost nearly $1M to scams. Existing machines must be removed by Dec. 31.
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Minnesota's ban on new cryptocurrency ATM installations took effect Saturday, capping a regulatory push that state officials said was driven by nearly $1 million in resident losses to scams involving the machines since 2023.
Democratic Gov. Tim Walz signed the legislation on May 4. It prohibits new crypto kiosk installations – the machines common in gas stations and convenience stores – and requires all existing units removed from the state by Dec. 31.
Criminals used the ATMs to target seniors disproportionately, state officials said. Scammers impersonate law enforcement officers and pressure elderly victims into sending money through nearby crypto kiosks for a loved one's supposed release from jail, according to Paul Haas, an investigator with Minnesota's Department of Commerce.
"When victims call our office after a crypto kiosk scam, you can hear the panic and shame in their voices," Haas said. "By the time victims realize they were deceived, the emotional and financial damage can be devastating."
Many thefts go unreported because victims are embarrassed at having been tricked, officials said.
Last year alone, investigators logged 70 cases. More than $540,000 was lost. The average loss per transaction was nearly $6,800, according to state officials.
The mechanics of the fraud exploit a feature of cryptocurrency that distinguishes it from traditional banking. Crypto ATM transactions cannot be reversed, and funds are difficult to trace once they reach a scammer's digital wallet, officials in several states with similar problems said. Transactions on a decentralized blockchain have no central institution that can cancel or recover them.
Traditional bank transactions pass through centralized institutions that can freeze, dispute or reverse certain payments. U.S. consumer-protection laws require banks to investigate unauthorized electronic transfers. Credit-card customers have chargeback rights. Crypto transactions generally lack comparable protections, though Congress is working on bringing digital currency under more stringent federal regulation.
The ban arrives as Minnesota faces broader scrutiny over fraud in government-funded programs. On July 21, the Trump administration froze more than $1 billion in federal Medicaid funding to California and Minnesota over suspected fraud. The Centers for Medicare & Medicaid Services, led by Mehmet Oz, is withholding more than $200 million from Minnesota while federal officials review what they described as high-risk Medicaid claims and documentation deficiencies.
Days after that announcement, the Justice Department said four Minnesota men pleaded guilty to stealing $2.2 million from the state's program to help homeless people. The program was primarily funded through Medicaid.
The crypto ATM ban is a state-level response to a problem that federal regulators have also flagged. The FBI's Internet Crime Complaint Center has warned about crypto kiosk scams nationally, and several other states have introduced or passed similar restrictions this year.
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