Minnesota lawmakers, with strong support from local law enforcement and the Department of Commerce, have proposed legislation aimed at implementing a statewide ban on crypto ATMs. House File 3642, introduced by Rep. Erin Koegel, advanced to the House Commerce Finance and Policy Committee on Thursday. This proposed bill seeks to outlaw virtual currency kiosks that permit immediate cryptocurrency purchases using cash or debit cards, and simultaneously invalidate the regulatory framework that was established earlier in 2024.
The previous regulation required operators to display warnings about cryptocurrency not being legal tender and transactions being irreversible. It also set a daily transaction cap of $2,000 for new customers with accounts less than 72 hours old and provided a 14-day window for fraud victims to seek refunds by contacting the company and law enforcement. However, Department of Commerce officials testified that fraudsters routinely circumvent these safeguards by instructing victims to utilize existing accounts or machines located in adjacent states like Wisconsin. The department documented 70 complaints over the past year, amounting to $540,000 in losses, though it’s important to note that most such incidents often go unreported.
Woodbury Police Det. Lynn Lawrence recounted a distressing case involving a victim on a fixed income who, over six months, lost approximately half of her monthly earnings to scammers via repeated bitcoin ATM transactions. Lawrence stated, “She was afraid she was going to have to live out of her car because she had no money left.” Echoing this sentiment, Sam Smith, the Commerce Department’s government relations director, informed lawmakers that “Previous efforts to increase consumer protections for crypto kiosks have failed.”
Larry Lipka from CoinFlip, a significant operator in the sector, acknowledged the existence of the problem but voiced opposition to a complete ban. He remarked, “The scammers are vigilant. They’re terrible and they’re stealing from Americans,” adding, “It is inappropriate to ban a legal product because fraud is happening. Not our fault.” It’s estimated that roughly 350 licensed crypto kiosks operate within the state, managed by eight to ten different companies.
Crypto ATM Scams Targeting the Elderly Are a National Concern
A similar pattern of exploitation is evident across the nation. Earlier this month, Massachusetts Attorney General Andrea Joy Campbell initiated a lawsuit against Bitcoin Depot, a crypto ATM operator, alleging that the company knowingly facilitated scams resulting in over $10 million in losses for state residents. Internal company data revealed that scam-related transactions constituted 13 to 16 percent of activity in early 2023, surging to over 50 percent of the monetary volume processed through Massachusetts machines between August 2023 and January 2025. A 2021 internal review had previously identified that 90 percent of customers engaging with a specific due-diligence team were likely scam victims. In response, the company stated its disagreement with the allegations, affirmed its cooperation with law enforcement, and highlighted its current requirement for identity verification on all transactions.
In Maine, a settlement of nearly $2 million was reached with Bitcoin Depot, which also mandated the removal of all its kiosks from the state. Similarly, Kansas regulators launched an investigation into crypto ATMs following a Centerville farm couple’s loss of $20,000. This incident occurred when a caller, impersonating Apple support, instructed the wife to withdraw cash and deposit it into a machine in Johnson County. Furthermore, West Virginia’s House Finance Committee approved House Bill 5353 on Thursday. This bill seeks to license operators, impose transaction limits, and enforce fraud prevention protocols, coming after residents reported $7.6 million in losses during the preceding year. AARP West Virginia supported the bill, noting that individuals aged 60 and above accounted for more than 85 percent of reported national losses in 2024.
FBI data indicates that there were nearly 11,000 crypto ATM scam complaints in 2024, totaling $247 million, with this figure escalating to $333 million in 2025 even before December’s data is included. However, it is widely believed that the true total is significantly higher due to the high rate of unreported incidents.
The Pervasiveness of Pig Butchering Scams
Asian criminal organizations have transformed “pig butchering” scams into an industrial-scale operation, leveraging forced labor in fortified compounds across Laos, Cambodia, and Myanmar. Trafficked individuals are coerced into following specific scripts to cultivate romantic or friendly relationships with targets on dating applications, subsequently directing them to fraudulent crypto trading platforms that display fabricated profits. Once the victims transfer funds, the perpetrators vanish. The term “pig butchering” metaphorically describes the process of emotionally engaging and “fattening up” a victim before exploiting them financially. Elderly individuals are often steered towards crypto ATMs because these machines only require cash and a QR code, thus bypassing the need for online wallets.
One such operation is implicated in a massive $13 billion bitcoin dispute between the United States and China. U.S. authorities seized 127,272 bitcoin, presently valued at approximately $13 billion, from Cambodian conglomerate chairman Chen Zhi. This confiscation represents the largest asset forfeiture in the Justice Department’s history, with prosecutors linking the funds to pig butchering proceeds laundered through the LuBian mining pool. Chinese officials, in turn, accuse the United States of orchestrating a 2020 hack of that very pool.
A report from the blockchain analytics firm Chainalysis reveals that illicit activity within the broader crypto ecosystem surged to a record high of approximately $154 billion in 2025. This marks a 162% increase from the revised 2024 total of $57.2 billion and represents the highest figure recorded since tracking commenced in 2020. Much of this surge is attributed to sanctioned nation-states, such as Iran and Venezuela, particularly through the use of dollar-pegged stablecoins.
Federal Attention on Crypto ATMs Through the CLARITY Act
The Digital Asset Market Clarity Act, also known as the CLARITY Act, is another piece of legislation addressing crypto ATMs at the federal level. While the bill successfully passed the House last year, Senate committees deferred markups in January as negotiators worked to finalize the bill’s language. A key point of contention between traditional banks and the crypto industry continues to be the debate surrounding stablecoin interest.
A draft bill from the Senate Banking Committee (PDF) proposes classifying kiosk operators as money transmitters, thereby subjecting them to Bank Secrecy Act obligations. It would also require operators to register all kiosk locations with the Treasury Department on a quarterly basis. Additional mandates outlined in the draft include compulsory disclosures and receipts, the appointment of a dedicated compliance officer, identity confirmation for all new customers, short holding periods before significant transfers, transaction limits, established refund procedures for suspected fraud, and a customer service helpline.
Privacy Advocates Voice Opposition
Advocates for financial privacy argue that imposing restrictions on crypto ATMs represents a curtailment of one of the few remaining avenues for exchanging dollars and crypto that has not yet been fully integrated into the state’s surveillance apparatus. In a recent blog post, Nick Anthony of the Cato Institute asserted, “It is heartbreaking that people are being tricked by scammers into sending money through cryptocurrency ATMs . . . However, the common denominator here is that scammers are the problem. That is who the government should be going after.”
Concurrently, truly decentralized peer-to-peer trading continues to exist. Any individual possessing cash and a smartphone can effectively function as an informal exchange, facilitating direct swaps of dollars for bitcoin or any other crypto asset on the street, entirely bypassing any centralized database of trades accessible to the government. Nevertheless, it is predominantly dedicated cypherpunks, motivated more by philosophical principles than by practical convenience, who go to such lengths to preserve privacy in this manner. The vast majority of cryptocurrency activity is increasingly concentrated around fintech companies and more easily regulated stablecoins, despite the persistent and significant security vulnerabilities inherent in this centralized structure.