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<br />Councilmember Buscher asked whether, under a registration ordinance, liability for fraud <br />associated with a cryptocurrency ATM would transfer to the party registering the kiosk, such as <br />the property owner. <br /> <br />City Attorney Johnson explained that assigning direct liability to the registrant for cryptocurrency <br />kiosk fraud is legally complex. She noted that the proposed ordinance regulates kiosks through <br />property owners because many lease agreements provide property owners with a percentage of <br />kiosk proceeds, creating a financial incentive that can discourage oversight. <br /> <br />City Attorney Johnson stated that this financial benefit provides a legal justification for requiring <br />property owners to register kiosks and comply with regulatory restrictions, ensuring they have <br />“skin in the game.” However, she clarified that the ordinance is not intended to impose criminal <br />liability on property owners and would not support criminal charges against them. <br /> <br />Attorney Johnson added that the registration ordinance model, originally drafted for Forest Lake, <br />has since been adopted by multiple cities, reinforcing its legal defensibility as a regulatory, not <br />punitive, approach. <br /> <br />Mayor Heineman stated that cryptocurrency kiosks are amoral tools and that fraud is typically <br />committed by individuals using the machines rather than by kiosk owners. He emphasized that <br />preventing fraud depends on having engaged and invested shopkeepers who are willing to question <br />suspicious transactions, particularly when vulnerable residents appear to be transferring large <br />sums. <br /> <br />Mayor Heineman noted that, under current conditions, property owners often lack an incentive to <br />intervene and expressed support for a regulatory approach that places the onus on shopkeepers or <br />property owners to monitor and vet the use of the machines. <br /> <br />Mayor Heineman indicated that doing nothing is not acceptable, while pursuing a full ban could <br />expose the city to litigation risk. He characterized the proposed registration framework as <br />regulatory “red tape” intended to deter harmful behavior and protect residents, rather than to punish <br />legitimate businesses. He concluded by asking whether the City of Forest Lake currently has any <br />cryptocurrency kiosks in operation, noting his understanding that they may have all been removed. <br /> <br />City Attorney Johnson confirmed that all cryptocurrency kiosks have been removed in Forest <br />Lake. She explained that the city previously had four kiosks: three were associated with significant <br />fraud, and one had none. Ultimately, all property owners chose to remove the machines, <br />determining that the regulatory requirements were not worth the continued operation. <br /> <br />City Attorney Johnson added that both Washington County and Anoka County are discussing <br />countywide bans, noting that fraudsters typically direct victims by phone to the nearest available <br />kiosk. As kiosks are removed from one jurisdiction, fraud activity tends to shift to nearby cities. <br /> <br />City Attorney Johnson stated that for regulatory efforts to be truly effective in protecting the <br />broader community, wider regional or statewide participation would be necessary. She noted that <br />City Council Work Session / January 27, 2026 <br />Page 7 of 10 <br />