Miami Firm Battles Stillwater Over Cryptocurrency ATM Ban

Athena Bitcoin, a Miami company operating three cryptocurrency ATMs in Stillwater, Minnesota, is challenging the city’s newly adopted ban on crypto machines. The company argues the ordinance, which was approved Tuesday by the Stillwater City Council, directly conflicts with state law that permits and regulates such machines. The ban is set to take effect later this month after publication in the Stillwater Gazette.

The cryptocurrency company operates machines at two gas stations and a liquor store in Stillwater, part of its network of over 3,500 ATMs across 35 states. According to company representatives, the ordinance is “preempted” by Minnesota law, which already provides regulatory oversight for cryptocurrency operations.

Stillwater officials enacted the ban in response to growing concerns about scams targeting residents. According to police reports, Stillwater residents have fallen victim to more than 30 cryptocurrency-related scams since January 2023, losing approximately $213,000. In one notable case from October, officers discovered a 75-year-old woman depositing $5,820 into an Athena Bitcoin ATM, with plans to deposit an additional $14,180 in cash.

Legal Arguments and Concerns

City Attorney Korine Land noted in an April 15 memo that scammers have circumvented existing state regulations. She also highlighted the excessive fees associated with crypto ATM transactions, which can reach 20-30 percent. “When you consider the high volume of scam transactions being performed at kiosks, coupled with the excessive fees that are being charged at the kiosks, both the operator and the host are profiting from the victims,” Land wrote.

Robert Musiala, an attorney representing Athena Bitcoin, countered in an April 14 letter that the company regularly collaborates with law enforcement agencies and is committed to fighting financial crimes. “Athena Bitcoin would like to work with the city of Stillwater to address the problem of scams involving (Virtual Currency) Kiosks. However, the Ordinance banning VC Kiosks is not the solution,” he stated.

Alternative Regulatory Approach

While Stillwater has opted for a complete ban, neighboring Forest Lake is pursuing a different strategy. Forest Lake officials are developing an ordinance that would require cryptocurrency ATM registration rather than prohibition. The proposed ordinance would mandate a $2,000 registration fee, verification that operators had no more than two instances of substantiated fraud within six months, installation of surveillance cameras, and posting warning signs about potential scams.

Forest Lake City Attorney Amanda Johnson explained that their approach aims to balance community protection without imposing an outright ban. “If you are not doing something that’s harming the people who live or work or play in Forest Lake, then you get to continue,” she told the Pioneer Press.

The ordinance banning crypto ATMs in Stillwater represents one of the first such municipal actions in Minnesota as communities grapple with balancing technological innovation and consumer protection.

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