Tennessee has become the second U.S. state to outlaw Bitcoin and cryptocurrency ATMs, following Indiana's lead in cracking down on crypto kiosks over fraud and consumer protection concerns. The move stems from Tennessee House Bill 2505, which Governor Bill Lee signed into law on April 13, giving operators until July 1 to shut down their machines.
The legislation was co-sponsored by Republican state representatives Cameron Sexton and Jay Reedy. In a March statement, Sexton said the kiosks “have become a gateway for scammers to exploit Tennesseans, especially our seniors.” Reedy added, “Crypto ATMs have given scammers a fast and easy way to target our citizens and scare them into draining their savings.” Violations are classified as a Class A misdemeanor, on par in Tennessee with simple drug possession and domestic assault.
According to FBI data released this month, Americans aged over 60 lost $257 million to scams involving Bitcoin ATMs last year, a 58% increase year-over-year. Citizens under 30, for comparison, lost $6.6 million to that type of scam in 2025. In Tennessee alone, local authorities warned of a scam where victims had lost $4 million to overseas scammers posing as law enforcement.
The state hosts 651 Bitcoin ATMs, with a majority clustered around Nashville, according to Coin ATM Radar. Locations range from gas stations and smoke shops to liquor stores. In March, Indiana became the first state to impose a sweeping ban on Bitcoin ATMs, with one law enforcement official noting that “the number of reports has doubled each year for the last four years.” Amid an uptick in scams, several states have passed legislation imposing transaction limits and mandating refunds for victims. In Minnesota, lawmakers are weighing legislation that would follow Tennessee's lead and ban Bitcoin ATMs across the state.
Crypto ATMs have drawn attention from state regulators because they sit at the intersection of cash transactions and digital assets, creating conditions that fraud operators exploit. Scammers frequently direct victims to crypto kiosks to send irreversible payments, often impersonating government agencies or tech support representatives. Unlike mainstream cryptocurrency exchanges that enforce identity verification and transaction monitoring under federal anti-money-laundering rules, many crypto ATM operators have historically operated with lighter compliance standards. This gap has made kiosks a preferred tool for romance scams, impersonation schemes, and money laundering.
The “second state” designation is significant because it signals an emerging pattern rather than an isolated action. With two states now moving to outlaw crypto ATMs, operators in other states may face growing pressure from local lawmakers considering similar measures. The bans also raise questions about how crypto access will evolve at the state level, with some jurisdictions exploring alternative frameworks for digital asset payments through traditional financial rails.
