The St. Paul City Council voted unanimously yesterday to ban cryptocurrency kiosks throughout the city, citing concerns over consumer protection and potential criminal activity. The decision makes St. Paul the latest American municipality to restrict these increasingly controversial machines.
“These kiosks are appearing in underserved neighborhoods with minimal oversight,” said Councilmember Mitra Nelson during Tuesday’s session. “We’ve seen evidence they’re being used for fraudulent schemes that target vulnerable residents.”
The ban comes after a six-month investigation revealed twenty-three crypto ATMs operating across St. Paul, predominantly in convenience stores and gas stations in lower-income areas. According to police reports obtained through public records requests, at least fourteen fraud cases connected to these machines were reported in 2024 alone.
I spoke with Marcus Johnson, who lost $3,800 at a crypto kiosk on University Avenue last spring. “A caller claiming to be from the IRS said I needed to pay immediately through Bitcoin to avoid arrest,” Johnson explained. “I didn’t understand how these machines worked, but I was scared.” Johnson’s experience reflects a pattern seen nationwide, where scammers direct victims to crypto ATMs to facilitate untraceable transactions.
The ordinance prohibits any device that “exchanges physical currency for cryptocurrency” within city limits. Existing machines must be removed within 30 days or operators face fines starting at $1,000 per day. The council’s decision follows similar measures in Miami, Atlanta, and several California cities.
Financial technology advocates expressed disappointment. “This ban closes off innovative financial services to communities that already face banking challenges,” said Rebecca Wong from the Digital Currency Alliance. “Instead of prohibition, we need smart regulations and consumer education.”
However, the Minnesota Financial Crimes Task Force reported a 320% increase in cryptocurrency-related fraud since 2022. Detective James Karsten testified that nearly 68% of victims were seniors or immigrants. “These machines operate with virtually no safeguards,” Karsten stated. “Unlike traditional ATMs, they require minimal identification and can process thousands of dollars in minutes.”
City Attorney Lyndsey Olson defended the council’s authority to enact the ban. “State law grants municipalities clear powers to regulate businesses operating within their jurisdiction, especially concerning public welfare,” she noted during the hearing.
My conversations with store owners revealed mixed feelings about hosting these machines. Hamid Farooqui, who allowed a Bitcoin ATM in his Rice Street convenience store for eight months, admitted the arrangement was problematic. “The company paid me $400 monthly for space, but I saw too many confused customers getting ripped off,” Farooqui told me. “One elderly woman tried to send her entire social security payment. I had to intervene.”
The council’s decision wasn’t without controversy. About two dozen protesters gathered outside City Hall before the vote, holding signs reading “Financial Freedom” and “Don’t Block Innovation.”
Tech entrepreneur Devon Williams argued the ban overreaches. “Bad actors exist in every financial system,” Williams said. “This punishes legitimate users and businesses while pushing crypto transactions underground or to neighboring communities.”
Council President Amy Brendmoen acknowledged these concerns but remained firm. “We’re not making a judgment on cryptocurrency itself, but on unregulated machines that have demonstrated real harm in our neighborhoods,” she explained after the vote.
Data from the Better Business Bureau shows cryptocurrency scams now rank among the top three financial fraud categories nationally, with median losses of $3,100 per victim—significantly higher than most other scam types. The FBI’s Internet Crime Complaint Center documented $2.7 billion in crypto fraud losses across America in 2023.
The Minnesota Retailers Association has taken a neutral position. “Our members prioritize customer safety,” said Executive Director Bruce Nustad. “While some businesses benefit from hosting these kiosks, we respect the council’s public safety concerns.”
Mayor Melvin Carter is expected to sign the ordinance next week. His office released a statement supporting the council’s decision, emphasizing that “protecting consumers from predatory financial practices remains a priority.”
For residents still holding cryptocurrency, legitimate online exchanges continue to operate legally. The ban specifically targets physical kiosks rather than digital transactions.
After covering politics for two decades, I’ve observed how technology often outpaces regulatory frameworks. This case illustrates the challenging balance between innovation and consumer protection that local governments increasingly face. While cryptocurrency represents a significant evolution in financial systems, the unregulated nature of these physical exchange points has created undeniable vulnerabilities.
Whether St. Paul’s approach becomes a model for other cities remains to be seen, but it certainly won’t be the last word in the ongoing negotiation between emerging financial technologies and public safety concerns.
