Minnesota recorded $540,000 in crypto kiosk-related losses last year across 70 complaints. Lawmakers now want to eliminate the machines entirely, arguing prior safeguards failed to protect vulnerable residents.
Representative Erin Koegel introduced HF 3642 this week, proposing a statewide ban on the placement or operation of any virtual currency kiosk. The bill would repeal nearly two dozen statutory provisions enacted in 2024 that currently regulate the sector. Minnesota has roughly 350 licensed kiosks run by eight to 10 operators, according to the Department of Commerce.
Are Existing Crypto Kiosk Safeguards Failing?
The 2024 framework imposed disclosure mandates and transaction caps aimed at curbing fraud. New customers were limited to $2,000 per day during their first 72 hours and entitled to full refunds if fraud was reported within 14 days. Yet only about 48% of complainants received refunds, averaging 16% of losses, state officials testified. Does that recovery rate justify dismantling the entire regime?
Woodbury Police Detective Lynn Lawrence described one victim on a fixed income who completed at least 10 bitcoin transactions over six months, sending roughly half her monthly income to scammers.
“She was already vulnerable with fixed income and food and housing insecurity,” Lawrence told lawmakers, adding that adult protection services intervened after the victim feared losing her housing.
Sam Smith, government relations director at the Minnesota Department of Commerce, said the agency “strongly supports HF 3642” and concluded that previous consumer protection efforts “have failed.”
Minnesota’s proposal follows similar moves elsewhere. Illinois enacted the Digital Asset Kiosk Act in 2024, capping transaction fees at 18% and limiting new customer activity to $2,500 daily, while New Zealand announced a full ban on 157 machines as part of anti-money laundering reforms. The next inflection point will be whether HF 3642 advances out of committee, potentially setting a precedent for other US states weighing outright prohibition over tighter supervision.
