Tennessee has become the second U.S. state to outright ban crypto ATMs, making it a misdemeanor to operate or host the machines anywhere in the state.
Gov. Bill Lee signed House Bill 2505 into law on April 13 after it passed both chambers unanimously, with the bill’s sponsor and four cosponsors being Republicans. It was officially codified on Thursday and will take effect July 1.
It 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 crypto ATM operators as well as businesses that allow them on their property.
Violations carry a Class A misdemeanor, which can result in penalties of up to one year in prison and a $2,500 fine.
A majority of states already have rules in place that deter these machines from being used to facilitate scams, but only two have gone as far as a blanket ban. Last month, Indiana became the first state to enact a full statewide ban.
An AARP report notes that “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, many have added provisions that require crypto kiosk operators to hold a state license, set daily transaction limits, and, in some cases, offer refunds to scam victims.
Crypto kiosk fraud
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.
But for years, international scammers have been using them to facilitate billions of dollars in fraud.
One common scenario involves scammers posing as police or government officials, telling victims they face arrest or owe a fictitious debt. They then direct them to withdraw cash, convert it into crypto and send it via a kiosk.
Cryptocurrency kiosks were tied to nearly $390 million in reported losses in 2025 alone, according to FBI data, with older Americans accounting for a disproportionate share of victims.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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