Tennessee has become the second U.S. state to outright ban crypto ATMs, with Governor Bill Lee signing House Bill 2505 into law on April 13, 2024, after it passed both chambers unanimously. The ban will take effect July 1, 2024, and makes it a misdemeanor to operate or host the machines anywhere in the state.
Legislative Details
The bill, sponsored by Republicans with four cosponsors, prohibits the installation or operation of “virtual currency kiosks,” commonly known as bitcoin ATMs, which are often found in gas stations, convenience stores, and shopping malls. The law applies to both crypto ATM operators and businesses that allow them on their property.
Violations carry a Class A misdemeanor charge, which can result in penalties of up to one year in prison and a $2,500 fine.
National Trend Toward Regulation
Tennessee follows Indiana, which became the first state to enact a full statewide ban last month. A majority of states already have rules in place to deter crypto ATMs from being used to facilitate scams, though most have not implemented blanket bans.
According to an AARP report, “thirty states have introduced bills related to crypto kiosks this year alone, bringing the total number that have passed laws to 20 as of 2026.” Among those states, many have added provisions requiring crypto kiosk operators to hold a state license, set daily transaction limits, and in some cases offer refunds to scam victims.
Fraud Mechanisms and Impact
Crypto kiosks themselves are not inherently fraudulent—they function as point-of-sale machines that let users buy and sell cryptocurrencies for cash and transfer funds to external wallet addresses. However, international scammers have used them for years to facilitate billions of dollars in fraud.
One common fraud scenario involves scammers posing as police or government officials, telling victims they face arrest or owe a fictitious debt, then directing them to withdraw cash, convert it into crypto, and send it via a kiosk.
According to FBI data, cryptocurrency kiosks were tied to nearly $390 million in reported losses in 2025 alone, with older Americans accounting for a disproportionate share of victims.
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