Minnesota Shifts From Regulating Crypto ATMs to Banning Them
Minnesota has replaced regulation with prohibition in its approach to cryptocurrency ATMs, becoming one of the first U.S. states to conclude that consumer safeguards alone were insufficient to address a growing wave of fraud linked to virtual currency kiosks.
Summary:
- Minnesota has become one of the first U.S. states to prohibit public cryptocurrency ATMs after concluding earlier consumer protection rules failed to curb fraud.
- The law took effect on Aug. 1, requiring operators to remove publicly accessible kiosks and return customer funds by Dec. 31.
- Policymakers are increasingly targeting crypto access channels rather than digital assets themselves.
- The legislation could influence how other states approach cryptocurrency ATM regulation.
Rather than tightening operating rules, lawmakers opted to remove the machines from public locations altogether while preserving access to cryptocurrencies through regulated digital platforms.
Minnesota Ends Public Crypto ATM Operations
The statewide prohibition took effect on Aug. 1 under Chapter 65 (S.F. 3868), making it illegal to install, operate or maintain public virtual currency kiosks.
Operators must remove every machine accessible to the public by Dec. 31, 2026. Businesses that offered cryptocurrency services exclusively through kiosks are also required to return customer balances before that deadline, either in U.S. dollars based on market value or by transferring digital assets to a wallet designated by the customer.
Key Provisions of the Law
- Effective date: Aug. 1, 2026
- Public crypto ATMs prohibited: Installation, operation and maintenance are no longer permitted
- Removal deadline: All publicly accessible kiosks must be removed by Dec. 31, 2026
- Customer payouts: Operators must return customer funds in cash or transfer cryptocurrency to a user-designated wallet
- Compliance records: Blockchain transfers must be documented and retained for regulatory review
Why Minnesota Changed Course
The legislation follows an earlier attempt to regulate crypto ATMs rather than eliminate them.
Rules introduced in 2024 required transaction limits for new users, fraud warnings and refund procedures designed to reduce scams.
According to lawmakers, regulators and law enforcement agencies, those measures proved ineffective because fraudsters frequently coached victims through the warning screens while keeping them on the phone throughout the transaction.
Between 2023 and 2025, Minnesota residents filed more than 100 complaints involving cryptocurrency kiosks, reporting losses approaching $1 million. Nationally, the FBI estimates Americans lost more than $388 million to crypto ATM fraud.
The new law reflects a conclusion that changing machine safeguards was not enough to disrupt the scams themselves.
What the Ban Means for Operators
The legislation reshapes how cryptocurrency kiosk businesses can operate in Minnesota.
Companies that relied on physical machines must either withdraw from the state or transition customers to digital services before the end-of-year deadline. Operators serving Minnesota residents will increasingly need to rely on online onboarding, remote identity verification and exchange-based platforms instead of cash-funded kiosks.
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For consumers, the legislation changes how cryptocurrency is purchased rather than whether it can be owned. Digital assets remain legal, and residents can continue buying and selling cryptocurrencies through regulated online exchanges. State-chartered banks and credit unions are also permitted to offer cryptocurrency custody services under Minnesota law.
States Are Taking Different Regulatory Paths
Minnesota joins a growing list of jurisdictions responding to crypto ATM fraud, although governments are pursuing different regulatory strategies.
| Regulatory Approach | Jurisdictions | Policy Objective |
|---|---|---|
| Statewide bans | Minnesota, Indiana, Tennessee | Eliminate public cryptocurrency kiosks |
| Moratoriums | Vermont | Prevent new installations while regulators assess risks |
| Stricter regulation | California, Connecticut, Iowa, Nebraska | Maintain kiosks under tighter consumer protection and licensing rules |
| International restrictions | United Kingdom, New Zealand, Australia | Limit or prohibit operations through AML enforcement, licensing or outright bans |
The differing approaches reflect an ongoing policy debate over whether stronger compliance requirements are sufficient or whether public crypto ATMs present risks that cannot be effectively managed through regulation alone.
Minnesota Could Become a Test Case
The state’s decision may provide one of the first large-scale tests of whether eliminating crypto ATMs reduces fraud more effectively than transaction limits, warning screens and other consumer protection measures.
Industry operators argue that outright bans target compliant businesses rather than the criminals exploiting them, while supporters contend that removing public kiosks eliminates one of the most common payment methods used in cryptocurrency scams.
As other states review their own regulatory frameworks, Minnesota’s experience is likely to become an important reference point in determining whether future policy focuses on tighter oversight or broader prohibitions of crypto ATMs.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Kosta Gushterov
Reporter at CoinsPress
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
