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. The bill passed both chambers unanimously and will take effect July 1, making it a misdemeanor to operate or host the machines anywhere in the state.
Legislative Details and Scope
House Bill 2505 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. The bill’s sponsor and four cosponsors were all Republicans, and it was officially codified on Thursday following its April 13 signing.
Penalties and Enforcement
Violations of the Tennessee ban carry a Class A misdemeanor classification, which can result in penalties of up to one year in prison and a $2,500 fine.
State and National Landscape
Tennessee follows Indiana, which became the first state to enact a full statewide crypto ATM ban last month. 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 with existing regulations, 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. A majority of states already have rules in place that deter these machines from being used to facilitate scams, but only two have implemented blanket bans.
Crypto Kiosk Fraud Mechanisms
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 scenario involves scammers posing as police or government officials, telling victims they face arrest or owe a fictitious debt. They then direct victims 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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