Tennessee has made a definitive move towards the prevention of any scams related to cryptocurrencies, making it the second U.S. state to place a complete ban on cryptocurrency ATMs.
It is now illegal to provide such services in the state and use the machines as a result of the seriousness with which legislators regard the recent upsurge of scams associated with cryptocurrencies.
The new law was signed on April 13, having unanimously passed both chambers of Tennessee’s state legislature. The House Bill 2505 was proposed and supported by Republicans, and it was officially added to Tennessee’s legislation on Thursday.
It is set to take effect on July 1, giving businesses and operators a limited period to remove existing machines or face penalties.
What will the new law include?
Under the law, any installation and use of “virtual currency kiosks,” also known as Bitcoin ATMs, will be outlawed throughout the entire state.
Such machines are common in places where people go about their daily routines, including gasoline stations, convenience stores, and malls, where individuals are able to instantly exchange physical money for virtual money such as Bitcoin or make transactions to other wallet accounts.
They have gained popularity due to their ease of access, although this same feature makes them susceptible to abuse by scammers.
What’s notable is that the law targets not only the corporations that install these machines, but also the property owners and small-scale businesses that allow them to be installed in their buildings.
Violation of this law may carry a charge of a Class A misdemeanor, which is considered one of the most egregious types of misdemeanors under the law. It carries a punishment of up to one year in prison, fines of up to $2,500, or both.
With this new decision, Tennessee becomes the second state after Indiana, which recently emerged as the pioneer by announcing the implementation of a total ban on crypto ATMs in the entire state only a few weeks ago. This trend of successive decisions is an indication that there is a readiness among some policymakers to go for stricter measures as more and more fraud cases related to these ATMs emerge.
Tennessee’s new law comes in contrast to the rest of the U.S.
The overall trend across America has been the regulating of crypto ATMs and not their complete ban. According to a new study by AARP, legislation on the matter was presented by lawmakers in 30 states this year alone. As of 2026, almost 20 states already have their own laws pertaining to crypto kiosk operation. The majority of those laws deal with safety aspects, such as requiring a license to operate, setting daily limits on transactions, displaying warning messages on screens about potential fraud, and sometimes reimbursing losses sustained by victims of scam.
The most essential part to remember about crypto kiosks, however, is that there is nothing illegal about them by itself. They work almost in the same fashion as regular ATMs do, allowing people to trade crypto using cash in an efficient way.
In particular, crypto kiosks can help those who lack internet access to trade cryptocurrency. Moreover, crypto kiosks offer a simple and safe alternative for those wary of trading crypto online or via smartphone.
The real threat is how criminals have taken advantage of this process. For the last few years, criminal gangs that operate overseas have been using crypto kiosks for collecting payments efficiently and leaving behind no evidence.
A typical scam includes impersonation of someone in authority like a law enforcement official, government agent, or utility representative who would call the victim, create a sense of emergency by saying there is something illegal happening, and urge him or her to go to the crypto kiosk and pay a fee in cash that will be transferred into cryptocurrency. After money gets withdrawn into an untraceable crypto account, it is almost impossible to get back.
The problem has become much bigger lately. According to the Federal Bureau of Investigation data, almost $390 million worth of cryptocurrency has been withdrawn from kiosks by 2025. Seniors are often targeted by such fraudsters due to their emotional vulnerability.
The decision by Tennessee to outlaw crypto ATMs is a move that indicates a change towards increased consumer protections in the midst of a rapid expansion of digital financial solutions. Proponents of the new regulation argue that banning the use of such technology will substantially reduce instances of fraud and safeguard residents who are more susceptible to cyberattacks. On the other hand, opponents point out that the new legislation could also prevent the use of crypto ATMs for legitimate purposes.
It will be interesting to see whether the move will influence policymakers elsewhere, given that many states are closely monitoring developments in Tennessee.