Tennessee Governor Bill Lee signed House Bill 2505 into law on April 13th, prohibiting the operation of cryptocurrency ATMs and kiosks within the state. The law will take effect on July 1st.

Combating a Surge in Crypto Scams

The legislation is a direct response to a significant increase in scams exploiting these machines. Middle Tennessee law enforcement reported nearly $4 million in fraud linked to crypto kiosk schemes in March alone.

Penalties for Non-Compliance

Operating a crypto kiosk after the July 1st deadline will be considered a Class A misdemeanor. Penalties include a potential fine of $2,500 and a jail sentence of up to 11 months and 29 days.

Current Landscape and Regulatory Scrutiny

Currently, Tennessee has 570 Bitcoin ATMs operating within its borders, according to CoinATMRadar. Regulators are preparing to ensure full compliance with the new law.

Vulnerabilities of Crypto Kiosks

Authorities highlight that crypto kiosks often lack robust Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, making them attractive to criminals. House Speaker Cameron Sexton emphasized that these kiosks have become a primary gateway for scammers.

National Trend Towards Regulation

The FBI’s 2025 Internet Crime Report revealed 13,460 complaints related to cryptocurrency kiosks, resulting in $389 million in losses – a 23% increase in complaints and a 58% increase in financial losses compared to the previous year.

Other Jurisdictions Taking Action

Tennessee is not alone in addressing the risks associated with crypto kiosks. Haverhill, Massachusetts, banned them in April 2026. Central Wisconsin implemented a $1,000 transaction limit in March 2026, and Minnesota prohibited their use in February 2026. Indiana is currently considering a similar ban.

State Representative Jay Reedy stated that eliminating these machines is a crucial step in dismantling a common tool used in fraudulent schemes. The law aims to protect residents and curb future exploitation.