Federal Court Lets Tennessee Crypto ATM Ban Take Effect

A federal judge refused an emergency request to block Tennessee’s law banning cryptocurrency ATMs, allowing Public Chapter 766 to take effect on July 1 while a constitutional challenge continues. The request was filed by GPD Holdings LLC, which operates as CoinFlip, and Charles Wernicke, chief executive of Private IT Corporation.

The court denied a temporary restraining order after finding the plaintiffs had not met the legal standard for emergency injunctive relief. The judge acknowledged that the ban would cause economic harm to the companies but concluded that harm did not outweigh the public interest in enforcing a statute enacted by the Tennessee General Assembly. The court also found the plaintiffs had not shown a likelihood of success on their constitutional claims, including alleged burdens on interstate commerce.

Public Chapter 766 makes it a Class A misdemeanor to knowingly install, permit, place or operate a virtual currency kiosk in Tennessee. State officials said the law followed legislative testimony about scams that used such machines to collect irreversible cryptocurrency payments. The Tennessee Department of Financial Institutions and the attorney general defended the statute in court, arguing a state interest in preventing fraud and protecting consumers.

Attorney General Jonathan Skrmetti described cryptocurrency ATMs as “tools for scammers targeting vulnerable Tennesseans” and urged people to watch for unusual cryptocurrency transactions involving elderly relatives or friends.

CoinFlip operates more than 5,500 cryptocurrency ATMs across 48 U.S. states and several countries. Private IT Corporation is a smaller, local operator that joined the lawsuit after the Tennessee ban threatened its business. Both companies argued that measures such as transaction limits, clearer fraud warnings, registration requirements and stronger identity checks could address scams without a full prohibition.

States have taken varied approaches to crypto ATMs. Indiana and Vermont have enacted full bans, Delaware has considered legislation that could lead to a ban, North Carolina and Virginia have adopted stricter rules, and Texas has studied fraud controls short of banning kiosks. The industry has responded to restrictions with legal challenges, lobbying and public information campaigns.

The constitutional lawsuit will continue in federal court. Until a final judgment or an appellate ruling, Public Chapter 766 remains enforceable and operators who knowingly place or run cryptocurrency kiosks in Tennessee face potential criminal penalties.