Legal
The pressing of coins into souvenirs has been a notorious gray area in the United States legal system. However, this letter sent from the Counsel to the Mint in July of 1980 gives a degree of clarity:
This is in reply to your letter of Jun 20, 1980, concerning United States statutes governing the destruction, melting, or other extramonetary uses of United States coins. You refer to and question the legality of a souvenir machine which compresses coins and returns a souvenir. You refer to Title 18, U. S. C. sections 331 and 475.
As you are already aware, a federal statute in the criminal code of the United States (18 U.S.C. 331), indeed makes it illegal if one "fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales or lightens" any U.S. coin. However, being a criminal statute, a fraudulent intent is required for violation. Thus, the mere act of compressing coins into souvenirs is not illegal, without other factors being present.
Section 475, which you refer to in your letter, regarding the attachment of notice or advertisement to legal tender, does not apply to your souvenirs in this case. Your are not impressing or attaching a business or professional card, notice or advertisement to a coin, you are simply making an impression on the coin.
We hope this information answers your question. If we can be of any further assistance, please contact us.
Sincerely,
Kenneth B. Gubin
Counsel to the Mint.
This letter addresses the legality of souvenir machines which, in exchange for payment, will take a United States one-cent piece and elongate it while printing a design on it. These are most common in amusement parks and other similar businesses. The Counsel to the Mint states that in order for this action to be considered criminal, fraudulent intent must be present. All things being equal, the compressing of coins into souvenirs is a legal action.