Minnesota cities target crypto ATMs
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Several Minnesota cities are considering crackdowns on cryptocurrency ATMs, saying they've become preferred tools for scammers.
Why it matters: Fraud at crypto kiosks has skyrocketed in recent years. In more than 5,500 cases nationwide, victims lost over $189 million to schemes involving a crypto ATM in 2023, according to the FBI.
- City officials say regulations are necessary to spare police resources from the difficult task of solving these crimes: The digital transactions are hard to trace, and victims rarely get full refunds.
State of play: Stillwater leaders banned the kiosks last month, and the St. Paul City Council met to discuss its own possible regulations last week.
- Forest Lake has enacted an ordinance that stops short of a ban, but requires all crypto ATMs to be registered — and would shut down any kiosk that fraudsters use more than once in six months.
Plus: Officials in Hastings, Cottage Grove and Woodbury have also considered their own rules, according to news reports.
How it works: Crypto kiosks allow users to buy online currencies like Bitcoin, Ethereum or Litecoin with cash.
- There are more than 200 crypto ATMs from companies like Bitcoin Depot, Coinflip and Athena in Twin Cities grocers, gas stations and liquor stores.
Threat level: FBI data suggest seniors are at greatest risk. People over 60 lost nearly two-thirds of the money reported stolen at crypto ATMs in 2023.
Case in point: One Maple Grove man's case is typical: A phone scammer convinced the senior to withdraw more than $22,000 in cash from his bank and send it to the scammer through a Bitcoin ATM, KARE11 reported last year.
Friction point: A new state law sets transaction limits at kiosks for newly registered customers, but scammers easily avoid this obstacle by sending their victim a QR code that links their deposit to an existing account, state and local enforcement officials say.
Between the lines: The crypto ATM era has probably passed, Axios Crypto's Brady Dale says.
- The kiosks were once useful when the currencies were harder to buy. Now, most traders are using online marketplaces, which have lower transaction fees.
- Most kiosks only allow cash deposits and not withdrawals — "which makes these things absolutely useless," Stillwater Mayor Ted Kozlowski told a St. Paul council hearing last week.
What they're saying: The kiosks' limited use case has led Stillwater Police Chief Brian Mueller to conclude they're "purely predatory."
The other side: Kiosk company Athena Bitcoin "regularly works with law enforcement agencies and is genuinely committed to fighting financial crimes, especially those targeting the elderly population," attorney Robert Musiala told Stillwater officials in a letter, according to the Pioneer Press.
- Athena also argued the city doesn't have the legal authority to regulate crypto kiosks.
What we're watching: Kozlowski acknowledged Stillwater's ban is likely to face a court challenge, but argued it was necessary to protect residents.