A federal court has refused to block Tennessee’s statewide ban on cryptocurrency ATMs, handing the crypto kiosk industry a significant legal defeat as Public Chapter 766 remains in full effect while a broader constitutional challenge plays out.
A federal court has refused to block Tennessee’s statewide ban on cryptocurrency ATMs, handing the crypto kiosk industry a significant legal defeat as Public Chapter 766 remains in full effect while a broader constitutional challenge plays out.
Federal Court Leaves Tennessee’s Crypto ATM Ban in Place
Tennessee Attorney General Jonathan Skrmetti announced on July 7 that a federal court denied emergency injunctive relief sought by two crypto ATM operators trying to halt the ban before it took effect. The court found that the public interest in enforcing the law outweighed the plaintiffs’ claimed economic harm. For related coverage, see Tennessee Candidate Indicted in Alleged $1.9M Crypto Ponzi Scheme.
The plaintiffs, GPD Holdings, LLC (doing business as CoinFlip) and Charles Wernicke (doing business as Private IT Corporation), had argued the law should be temporarily blocked while their constitutional challenge proceeds. The court disagreed, finding the operators had not shown they were likely to succeed on the merits. For related coverage, see Tennessee Man Indicted Over Alleged Crypto Ponzi Scheme.
“Cryptocurrency ATMs are tools for scammers targeting vulnerable Tennesseans and are rarely used for anything approaching a legitimate purpose,” Skrmetti said in the announcement. For related coverage, see U.S. Indicts 3 Men in $6.5M Violent Crypto Robbery Case.
“Cryptocurrency ATMs are tools for scammers targeting vulnerable Tennesseans and are rarely used for anything approaching a legitimate purpose.”
— Jonathan Skrmetti, Tennessee Attorney General
The ban took effect on July 1, 2026, and the court’s refusal to pause it means every crypto kiosk in Tennessee must remain offline while the underlying lawsuit continues. The broader constitutional case is still pending, but the industry has no interim relief.
What Public Chapter 766 Actually Bans
Tennessee’s law is not a disclosure requirement or fee cap. It is a statewide criminal prohibition. HB2505, enacted as Public Chapter 766, makes it a Class A misdemeanor to knowingly install, allow installation of, permit, place, or otherwise operate a virtual currency kiosk anywhere in the state.
The statute’s language is notably broad. It reaches beyond the companies that brand and service the machines. Any person or business that knowingly allows a crypto ATM on their property faces the same criminal exposure, a detail that previous crypto enforcement actions in Tennessee did not involve.
The political case for the ban drew on mounting consumer losses. In 2025, crypto ATM scams generated 13,460 complaints and $389 million in reported losses nationwide, figures that fueled bipartisan support for the prohibition.
Tennessee is not the first state to pursue aggressive crypto enforcement. State prosecutors have brought criminal charges against crypto fraud operators in multiple recent cases, and a gubernatorial candidate was indicted over an alleged $1.9 million crypto Ponzi scheme earlier this year.
Why the Ruling Matters for Operators, Hosts, and Licensees
The court’s decision creates immediate compliance risk for three distinct groups. Kiosk operators like CoinFlip face criminal liability if they continue running machines. Convenience stores, gas stations, and other businesses that hosted crypto ATMs face the same Class A misdemeanor charge if they knowingly permit a machine to remain on their premises.
The Tennessee Department of Financial Institutions added a third layer of exposure. The regulator warned that money transmitter licensees who violate Public Chapter 766 may face separate enforcement actions under the state’s Money Transmitter and Money Act, beyond the criminal penalty itself.
This dual-track enforcement risk, criminal charges plus regulatory action, is a detail that most coverage of the ruling has overlooked. For licensed operators, a misdemeanor conviction could also jeopardize their ability to maintain transmitter licenses in other states.
The next significant development will be the underlying constitutional challenge filed by CoinFlip and Private IT Corporation. Courts have occasionally struck down broad commercial bans on constitutional grounds, and how the federal judiciary handles crypto-related legal challenges continues to shape the regulatory landscape.
Until that case is resolved, Tennessee’s ban stands. Every crypto ATM in the state must remain dark, and any operator or host who defies the order risks both a criminal record and regulatory consequences.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.