Tennessee bans crypto ATMs that have become 'payment portal of choice for scammers' — second state to restrict machines after Indiana

Source: Tom’s Hardware

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Governor Bill Lee of Tennessee signed into law a bill that bans cryptocurrency ATMs in the state starting July 1, 2026. According to The Record, Tennessee becomes the second state to impose a blanket ban on these machines after Indiana, with Minnesota working on similar legislation. State governments have been acting against crypto ATMs amid FBI warnings that Americans lost $333 million to fraud that used these machines as a vehicle for theft.

Why crypto ATMs are targeted

While crypto ATM machines aren’t scams per se, cybercriminals often use them to transfer funds from victims. Because the technology is relatively new, many users assume the machines operate like traditional banks, which can detect and prevent fraudulent transactions. In reality, money deposited into a crypto ATM can be difficult—or impossible—to retrieve, making them a “payment portal of choice for scammers,” according to the report.

Notable incident in Texas

A county sheriff in Texas sawed open a Bitcoin Depot ATM and seized its contents after a victim deposited $25,000. Although the machine was quickly secured, the victim cannot immediately retrieve the cash; it must first go through the legal system as evidence.

Law enforcement and legal actions

U.S. Attorney General’s office sued Athena Bitcoin, alleging that 93 % of transactions on its machines were linked to fraud and scams, and that the company earned “undisclosed fees on the backs of scam victims.” Athena Bitcoin defended itself by highlighting “strong safeguards against fraud, including transparent instructions, prominent warnings, and customer education.” Despite these measures, the number of crypto ATM scam victims continues to rise annually.

State-level bans and future outlook

Lawmakers across multiple states are stepping in to protect constituents. Because cryptocurrency is decentralized by design, it is harder to implement safeguards for laypeople who may not understand how it works. Consequently, several states are opting to ban crypto ATMs outright. While the removal of these machines may inconvenience some users, alternative methods for converting cash into Bitcoin, Ethereum, and other cryptocurrencies remain available.