In brief
- Lawmakers in Minnesota are considering a total ban on crypto ATMs.
- The state passed a regulatory framework for the machines in 2024.
- Countries like New Zealand have recently imposed sweeping bans.
Lawmakers in Minnesota are considering a total ban on crypto ATMs, with legislation introduced earlier this week in response to a growing number of scams against the elderly.
Introduced on Monday by Rep. Erin Koegel, who serves as co-chair of the state’s House Finance and Policy Committee, HF 3642 would effectively ban all physical machines in Minnesota that allow users to purchase cryptocurrencies using cash.
The legislation marks renewed efforts to address risks associated with crypto ATMs, following a state framework passed in 2024 that imposed a $2,000 daily transaction limit for new customers, refund requirements, and a licensing framework for operators.
Although several states have implemented pauses or strict local bans on crypto ATMs, the measure in Minnesota would likely be the first of its kind in the nation. It would mirror sweeping bans taken up in multiple countries, such as one last year in New Zealand.
Law enforcement officials testified during a hearing on Thursday that older Minnesotans are continuing to lose tens of thousands dollars from scammers, who direct victims to send them crypto under false pretenses, often while impersonating the government or tech support.
At the hearing, a local detective recalled how one resident feared she would become homeless after sending Bitcoin to a scammer 10 times within six months. The official said she was losing 50% of her monthly income until she was found at a gas station appearing confused one day, and she required government assistance “due to her dire circumstances.”
There are around 430 crypto ATMs in Minnesota, which are clustered mostly around the state’s most populous city, Minneapolis, according to Coin ATM Radar. Across the country last year, victims reported $333 million in losses tied to crypto ATMs, according to the FBI.
CoinFlip General Counsel Larry Lipka said at the hearing that the ATM operator is aware of the prevalence of scams using its machine, but scammers have multiple tools at their disposal.
In a letter submitted to the committee, the police chief of one city in Minnesota wrote that “law enforcement has an extremely limited ability to recover funds once transferred,” representing one of several challenges from a public safety perspective.
Rep. Keith Allen noted during the hearing that millions of dollars have likely been siphoned from rural communities that “could have been doing a lot of good.”
As lawmakers in Minnesota weigh a total ban on crypto ATMs, state prosecutors in other areas are advocating for restrictions against associated companies, including Bitcoin Depot.
Earlier this week, the largest operator of Bitcoin ATMs in North America signaled that it would begin requiring customers to provide personal identification each time they make a transaction. The move presented a voluntary effort to refine its compliance procedures.
That decision followed a lawsuit brought by Massachusetts Attorney General Andrea Campbell earlier this month, which alleged that Bitcoin Depot knowingly facilitated crypto scams while “removing safeguards against fraud and misleading investors in order to line their own pockets.”
Bitcoin Depot has pushed back against the assertion, according to ICIJ, with a spokesperson asserting recently that the firm is built around compliance and consumer protection. The company continues to work with law enforcement to combat illicit activity, they added.
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