Tennessee Crypto ATM Ban Takes Effect as Court Rejects Emergency Challenge

A federal court cleared Tennessee's ban on cryptocurrency ATMs to take effect, turning down an emergency bid from the industry's largest operator. Attorney General Jonathan Skrmetti announced the ruling July 7, leaving Public Chapter 766 enforceable while a constitutional lawsuit continues.

GPD Holdings, doing business as Coinflip, and Charles Wernicke of Private IT Corporation had asked for a temporary restraining order to block the law before its July 1 start. The court found the plaintiffs failed to meet the standard for emergency relief. Economic harm to the businesses did not outweigh the public interest in allowing a law passed by the Tennessee General Assembly to take effect, the judge ruled.

Skrmetti tied the machines directly to fraud:

“Cryptocurrency ATMs are tools for scammers targeting vulnerable Tennesseans and are rarely used for anything approaching a legitimate purpose.”

He urged people to watch for unusual crypto transactions involving elderly relatives or friends who may be scam victims.

Coinflip operates more than 5,500 Bitcoin ATMs across 48 states and several countries. Private IT Corporation is a smaller operator that joined the lawsuit after the ban threatened its local business.

Indiana and Vermont already have full bans on crypto ATMs. Tennessee's law makes it the third state to prohibit the machines entirely. Delaware has proposed a possible ban, North Carolina and Virginia adopted stricter rules, and Texas is studying fraud controls without banning the machines.

Operators argue that transaction limits and fraud warnings, paired with stronger Know Your Customer checks, would protect consumers without outlawing the machines. They are pushing back through lawsuits and lobbying campaigns.

Public Chapter 766 makes it a Class A misdemeanor to knowingly install, permit, place, or operate a virtual currency kiosk in Tennessee. The law followed testimony about scams that have cost victims millions of dollars nationwide, the attorney general's office said.

The court reviewed the plaintiffs' constitutional claims and found they had not shown a likely chance of success. The alleged burdens on interstate commerce did not clearly outweigh Tennessee's interest in preventing fraud and protecting consumers, the ruling said.

Nationwide, the crypto ATM network is shrinking. The United States lost 10,763 machines over the 68 days through early July, dropping from 38,708 to about 27,945, according to industry data cited in the source. The Tennessee ban could accelerate that decline.

Legal analysts said the outcome of the broader lawsuit could shape regulation in other states. If the law survives a full constitutional challenge, more states may follow Tennessee's lead. If struck down, operators will have a template for fighting similar restrictions.

The case remains active. A final ruling on the constitutionality of Public Chapter 766 could take months. Until then, Tennessee's crypto ATMs are offline.