The Impact of Minnesota’s New Crypto ATM Law

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The Minnesota Department of Commerce Financial Institutions and Enforcement Divisions introduced a new crypto law on August 1st to prevent crypto ATM fraud.

Crypto ATMs provide investors with a physical solution to depositing and trading cryptocurrency using a debit card or cash. These stand-alone kiosks can connect to digital wallets, allowing users to deposit tokens easily. Unlike fiat currency ATMs, these machines are used solely for depositing funds - they cannot dispense cash.

Bitcoin (BTC) is the number one cryptocurrency traded in ATMs, closely followed by Bitcoin Cash and Ethereum (ETH). This is unsurprising, given that BTC and ETH remain the two biggest cryptocurrencies based on data provided by Crypto News. Crypto ATMs also feature other prominent cryptocurrencies, such as Solana (SOL), Litecoin (LTC), and Dash (DASH).

Crypto ATMs and criminal activity

Over the last six months, crypto ATMs have increased not only in Minnesota but all over the world. According to Coin ATM Radar, over 2,500 ATMs have been installed since the start of 2024. The global market for crypto kiosks is expected to grow with a CAGR of 63.4% between now and 2030 and will have an estimated value of $182.1 million by then.

This high level and anticipated growth is worrying given how often the kiosks have been linked to criminal activity.

Cryptocurrency provides a somewhat anonymous banking solution. Transaction IDs and crypto bank addresses tend to be a random selection of numbers, which makes it difficult - but not impossible - to trace transactions back to specific individuals. The level of anonymity provided has made crypto ATMs popular amongst money launderers, drug traffickers, and other forms of criminals.

Investors who use crypto ATMs for legitimate purposes have also become victims of scams. Scammers have been known to target kiosks in the Minnesota area to steal money from crypto investors.

However, since the passing of the new crypto ATM law in August, there have been no reports of crypto fraud cases in the state.

Minnesota’s new crypto laws and the impact

The new legislation requires all ATM operators to disclose full terms and conditions to customers and to warn them of the risks of fraud. It has also established a daily transaction limit of $2,000, which limits the amount that investors could potentially lose through fraudulent activity. This also helps curb money laundering activity.

Most importantly, the new legislation requires that all victims of fraud must be refunded the amount lost by the ATM operator. This aspect has encouraged operators to implement tighter restrictions and be more proactive in prohibiting fraudulent accounts.

ATM restrictions in other states

Other states have created similar ATM restrictions over the last few months which have also delivered positive results. Vermont, for example, has implemented a law that demands kiosk operators register with the local regulator before providing deposit options to customers. Vermont has gone a step further than Minnesota by limiting crypto transactions to just $1,000 per day. In response to the proliferation of ATMs, they’ve also prohibited new installations until summer 2025.

The tighter restrictions imposed in Vermont may encourage Minnesota to review and tighten its own restrictions.