Tennessee Joins Indiana in Outlawing Crypto Kiosks
Tennessee Governor Bill Lee signed new legislation late last week that will ban cryptocurrency ATMs outright across the state, making Tennessee only the second state in the U.S. to impose such a sweeping restriction. The ban takes effect on July 1, and follows a similar measure enacted by Indiana in March. A comparable bill in Minnesota has already passed the state Senate and is currently awaiting a vote in the House.
Cryptocurrency ATMs — physical kiosks that allow customers to purchase digital currencies using cash — have expanded rapidly across the country in recent years, now commonly found in gas stations and grocery stores. The industry has promoted them as a convenient alternative to online exchanges. However, these machines have attracted mounting regulatory scrutiny, with critics arguing they function as a preferred payment conduit for fraudsters.
Law Enforcement Raises the Alarm
At a Tennessee House Commerce Committee hearing held in March, Cumberland County Sheriff Casey Cox delivered stark testimony about the kiosks' role in criminal activity. He described how law enforcement across Tennessee is "increasingly encountering them in connection with fraud schemes that target our most vulnerable citizens."
Sheriff Cox outlined several categories of scams his office has observed, including:
- Government impersonation scams run by overseas criminals
- Tech support cons designed to trick victims into believing their devices or accounts are compromised
- Romance scams in which fraudsters build emotional relationships with victims before requesting money
- Pig butchering scams, where scammers contact victims through messaging platforms, gain their trust over time, and ultimately manipulate them into transferring funds
Cox explained the mechanics of how these crimes unfold:
"They use fear and urgency to convince these victims that they must immediately withdraw cash and deposit into these crypto ATM machines."Victims are then instructed to scan a QR code that gives the scammer near-instant access to the transferred funds. Cox described the result as
"essentially a direct pipeline that allows criminals to turn cash from Tennessee citizens into untraceable digital assets,"noting that within seconds, deposited money is converted into Bitcoin and routed to criminal digital wallets.
Staggering National Losses, Elderly Disproportionately Affected
The scale of the problem extends well beyond Tennessee's borders. According to the FBI, there were 13,460 complaints related to cryptocurrency ATMs in 2025, with combined losses totaling $389 million. Particularly alarming is the demographic breakdown: more than two-thirds of those losses were suffered by people over the age of 60, underscoring that older Americans are bearing the brunt of these crimes.
State Attorneys General Take Legal Action Against Kiosk Operators
Legal pressure has also been building at the state level, with multiple attorneys general launching investigations and lawsuits against the crypto kiosk industry.
In February, Massachusetts filed a lawsuit against Bitcoin Depot, the largest cryptocurrency kiosk provider in the world. The suit alleged that among hundreds of customers contacted by the attorney general's office, more than 80% had fallen victim to scams.
Iowa has also recently sued both Bitcoin Depot and another major provider, CoinFlip, accusing them of profiting from scam-related transactions. Meanwhile, Washington, D.C. sued kiosk operator Athena in September, with allegations that 93% of its transactions in the district were connected to scam activity.
A Growing Regulatory Reckoning
These actions reflect a broader reckoning with an industry that has long operated in regulatory gray areas. While crypto ATM companies have maintained that their machines serve legitimate financial needs — particularly for unbanked or underbanked populations — the volume and severity of fraud complaints is prompting lawmakers and law enforcement to reassess whether those benefits outweigh the harms.
Tennessee's outright ban, set to take effect this summer, signals that at least some state governments are no longer willing to wait for industry self-regulation. With Indiana already having moved first and Minnesota potentially following suit, a patchwork of state-level prohibitions may be taking shape across the country.
Source: The Record