Minnesota Lawmakers Propose Statewide Ban on Bitcoin and Crypto ATMs

TL;DR

• Introduction of HF 3642 to ban all physical cryptocurrency kiosks in Minnesota.
• Official support from the Minnesota Department of Commerce and state police.
• Losses exceeding $540,000 reported to the state in a single year via these machines.
• Primary focus on preventing elder fraud and untraceable overseas transfers.

What Happened

On Thursday, February 26, 2026, the Minnesota House Commerce Finance and Policy Committee considered HF 3642, a bill authored by Representative Erin Koegel. The bill proposes a complete prohibition on the placement and operation of virtual currency kiosks, commonly known as Bitcoin ATMs, within the state. During the hearing, law enforcement officers from Woodbury and St. Cloud provided testimony regarding specific fraud cases, including one instance where a 78-year-old woman lost $80,000. The proposal effectively seeks to repeal the consumer protection laws enacted in 2024, with regulators arguing that current safeguards like transaction limits and warning prompts are insufficient to stop sophisticated scammers.

Key Developments

The Minnesota Department of Commerce confirmed that the state currently hosts approximately 350 licensed cryptocurrency kiosks operated by 8 to 10 different companies. Government Relations Director Sam Smith testified that the department received 70 formal complaints in 2025 alone, representing over half a million dollars in financial losses. Police Chief John Sherwin of Faribault reported that his city has documented $500,000 in kiosk-related scams since 2022, suggesting the actual figure could be four times higher due to underreporting. In response to the bill, industry representatives from kiosk operators like CoinFlip argued that a ban unfairly targets a legal product due to the actions of third-party criminals.

Why This Matters

This legislation represents one of the most restrictive regulatory attempts against cryptocurrency infrastructure in the United States. If passed, Minnesota would shift from a policy of regulated access to a total prohibition of physical access points. This move highlights a growing trend of state-level intervention to combat financial exploitation of vulnerable populations, as physical kiosks are frequently used by scammers to facilitate immediate, irreversible cash-to-crypto transfers that typically move funds outside of U.S. jurisdiction.

What Happens Next

The House Commerce Committee has laid the bill over for further consideration and potential refinement of the language. The legislation must successfully pass through both the Minnesota House and Senate before reaching the Governor’s desk for a final signature. The current legislative session is scheduled to continue until May 2026, during which time the Department of Commerce is expected to introduce additional consumer protection proposals alongside the kiosk ban.

FAQ

Is Minnesota banning all cryptocurrency transactions?

No, the proposed bill HF 3642 specifically targets physical cryptocurrency kiosks and ATMs. Residents would still be permitted to buy, sell, and trade digital assets through online exchanges and platforms.

How many crypto ATMs are currently in Minnesota?

According to the Minnesota Department of Commerce, there are approximately 350 licensed kiosks operated by 8 to 10 companies across the state as of February 2026.

Why are police supporting a ban instead of regulation?

Law enforcement officials, including Detective Lynn Lawrence, testified that scammers coach victims to bypass current 2024 regulations. They stated that the speed and irreversible nature of these machines make recovering stolen funds nearly impossible once the money moves overseas.

What was the outcome of the February 26 hearing?

The House Commerce Finance and Policy Committee laid the bill over for future consideration. This allows lawmakers to adjust the bill's language before a final vote is taken during the 2026 session.