Minnesota's ban on cryptocurrency ATMs went into effect on Saturday, following reports from state officials that residents have lost nearly $1 million in scams involving the machines since 2023.

Democratic Governor Tim Walz signed the legislation on May 4, prohibiting the installation of new crypto ATMs — also referred to as kiosks — which are typically located at gas stations and convenience stores. All existing machines must be removed from the state by December 31.

Minnesota is among the first states to implement a near-total ban on the devices. Operators such as Bitcoin Depot and CoinFlip collectively maintain tens of thousands of kiosks across the United States, and the industry has grown rapidly by placing machines in high-foot-traffic retail locations. Several other states have stopped short of prohibition, opting instead for licensing requirements, daily transaction limits, or mandatory on-screen consumer warnings. The Federal Trade Commission has issued repeated nationwide alerts about crypto ATM fraud, noting that reported losses from such scams have climbed sharply in recent years.

According to state officials, criminals have been using the ATMs to disproportionately target senior citizens. Paul Haas, an investigator with the Minnesota Department of Commerce, said scammers frequently impersonate law enforcement officers and pressure elderly victims into using nearby crypto ATMs to send money under the pretense of securing a loved one's release from jail.

"When victims call our office after a crypto kiosk scam, you can hear the panic and shame in their voices," Haas said. "By the time victims realize they were deceived, the emotional and financial damage can be devastating."

Officials noted that many thefts likely go unreported because victims feel embarrassed about having been deceived. In the past year alone, investigators recorded 70 cases of individuals falling victim to such fraud schemes. More than $540,000 was lost, with an average loss of approximately $6,800 per transaction.

Crypto ATM transactions cannot be reversed and are frequently difficult to trace once funds reach a scammer's digital wallet, according to officials in several other states that have reported similar issues.

Transactions made with cryptocurrency are generally irreversible because they are recorded on a decentralized blockchain, meaning no central institution can cancel them or recover the funds. Traditional bank transactions, by contrast, pass through centralized financial institutions that may be able to freeze, dispute, or reverse certain payments. U.S. consumer protection laws also require banks to investigate certain unauthorized electronic transfers, and credit card customers generally have the right to dispute unauthorized charges through the chargeback process. Crypto transactions generally do not carry comparable consumer protections, though Congress is working to bring digital currency under more stringent federal regulation.

The crypto ATM ban comes as Minnesota faces broader scrutiny over allegations of widespread fraud involving government-funded programs, which has prompted a growing federal crackdown and renewed criticism of Walz's oversight of state agencies.

On July 21, the Trump administration froze more than $1 billion in federal Medicaid funding to California and Minnesota over suspected fraud. The Centers for Medicare & Medicaid Services (CMS), led by Mehmet Oz, is withholding more than $200 million from Minnesota while federal officials review what they described as high-risk Medicaid claims and documentation deficiencies.

Days after that announcement, the Department of Justice reported that four Minnesota men had pleaded guilty to stealing $2.2 million from the state's program to assist homeless individuals. That program was primarily funded through Medicaid.