Tennessee Crypto ATM Ban Takes Effect After Federal Court Rejects Emergency Challenge

A federal court has allowed Tennessee’s ban on cryptocurrency ATMs to take effect while a constitutional lawsuit continues, giving the state an early legal win in its anti-fraud push.

Key Takeaways

• A federal court denied an emergency request to block Tennessee’s cryptocurrency ATM ban before its July 1 effective date.
• Public Chapter 766 remains enforceable while constitutional challenges from CoinFlip and Private IT Corporation move forward.
• The court found public interest favored enforcement, although plaintiffs showed the law would cause economic harm.

Why Did Tennessee’s Cryptocurrency ATM Ban Survive Its First Legal Test?

A federal court declined to halt Tennessee’s cryptocurrency ATM ban before it took effect, Attorney General Jonathan Skrmetti announced July 7. The ruling followed a lawsuit by GPD Holdings, LLC, operating as Coinflip, and Charles Wernicke, CEO of Private IT Corporation. The plaintiffs sought a temporary restraining order blocking Public Chapter 766 before its July 1 implementation.

The court found the plaintiffs failed to meet the legal standard for emergency injunctive relief. Although the businesses showed economic harm, the court said that did not outweigh the public interest in allowing a law passed by the Tennessee General Assembly to take effect. The case will continue while the statute remains enforceable.

Skrmetti welcomed the ruling and tied cryptocurrency ATMs to fraud targeting vulnerable residents. He said:

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

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

Coinflip is one of the world’s largest cryptocurrency ATM operators, with more than 5,500 Bitcoin ATMs across 48 U.S. states and several countries. Private IT Corporation is a smaller operator that joined the lawsuit after Tennessee’s ban threatened its local business.

How Far Are States Willing to Go Against Crypto ATMs?

Indiana, Vermont, and Tennessee have fully banned cryptocurrency ATMs as states respond to scams involving irreversible crypto payments. Others are taking narrower steps: Delaware has proposed a possible ban, North Carolina and Virginia have adopted stricter rules, and Texas is studying fraud controls without banning the machines.

The industry is pushing back through lawsuits, lobbying, and public relations campaigns. Operators argue that transaction limits, fraud warnings, registration rules, and stronger Know Your Customer checks would protect consumers without outlawing the machines.

What Does Public Chapter 766 Prohibit, and What Happens Next?

The Tennessee Office of the Attorney General defended the law for the state and the Tennessee Department of Financial Institutions. The measure aims to protect consumers by limiting machines state officials link to fraud. The announcement details:

“Public Chapter 766 makes it a Class A misdemeanor to knowingly install, permit, place, or operate a virtual currency kiosk in Tennessee. The legislation was enacted following testimony before the General Assembly regarding the growing use of crypto ATMs in scams that have cost victims millions of dollars nationwide.”

The court also reviewed the plaintiffs’ constitutional claims and found they had not shown a likely chance of success. It further concluded that the alleged burdens on interstate commerce did not clearly outweigh Tennessee’s interest in preventing fraud and protecting consumers.

The broader lawsuit remains active, and future proceedings will determine whether Public Chapter 766 survives the constitutional challenge. Until then, Tennessee’s crypto ATM ban remains in effect.