A federal court has refused to block Tennessee’s statewide ban on cryptocurrency ATMs, delivering a significant legal setback to the kiosk sector as the prohibition remains fully enforceable while a broader constitutional challenge proceeds.
On July 7, 2026, U.S. District Judge Travis McDonough denied emergency injunctive relief sought by CoinFlip operator GPD Holdings LLC and kiosk owner Charles Wernicke, doing business as Private IT Corporation. The plaintiffs argued that Public Chapter 766 would cause irreparable harm and unlawfully burden interstate commerce, but the court was not convinced. Judge McDonough ruled that the state’s interest in protecting consumers outweighed the operators’ need for immediate relief, noting limited evidence at this preliminary stage. The decision does not resolve the law’s constitutionality but allows enforcement to continue during litigation.
Public Chapter 766, which took effect on July 1, 2026, makes it a Class A misdemeanor to knowingly install, allow installation of, permit, place, or otherwise operate a virtual currency kiosk anywhere in Tennessee. The statute’s broad language extends criminal liability not only to branded operators but also to convenience stores, gas stations, and other hosts that knowingly keep a machine on their property. The Tennessee Department of Financial Institutions further warned that money transmitter licensees violating the ban may face separate enforcement actions under the Money Transmitter and Money Act, compounding the regulatory risk.
Tennessee Attorney General Jonathan Skrmetti defended the law, stating, “Cryptocurrency ATMs are tools for scammers targeting vulnerable Tennesseans and are rarely used for anything approaching a legitimate purpose.” The ban drew bipartisan support after reported nationwide crypto ATM scam losses reached $247 million in 2024 (FBI) and $389 million in 2025, with older adults disproportionately affected. Tennessee joins Indiana and Minnesota in imposing outright bans, while roughly 20 other states have adopted varying restrictions, including transaction caps and fraud reimbursement mandates.
Industry representatives, including CoinFlip CEO Ben Weiss, argue that kiosks serve unbanked and cash-reliant customers and that operators employ transaction monitoring and customer identification to combat fraud. However, the court’s ruling increases pressure on a sector already reeling from economic strain, exemplified by Bitcoin Depot’s Chapter 11 bankruptcy filing. The underlying constitutional lawsuit remains pending, meaning every crypto ATM in Tennessee must stay offline for now, with no interim relief for operators or hosts.
