House Bill 2505, sponsored by Rep. Jay Reedy (R-Erin) and House Speaker Cameron Sexton (R-Crossville), passed both chambers without a single dissenting vote. If signed, it will make Tennessee the second state in the country to impose an outright ban on crypto ATMs, following Indiana's move in March. The legislation is a direct response to $142 million in cryptocurrency scam losses that Tennesseans reported in 2025 alone.

What the Law Does

Under HB 2505, operating a crypto kiosk in Tennessee becomes a Class A misdemeanor, punishable by fines of up to $2,500 and a jail sentence of up to 11 months and 29 days. The law reaches further than most regulatory approaches: it extends criminal liability to the businesses that host machines on their premises, not only to the kiosk operators themselves. Convenience stores, gas stations, and other retail locations that allow a machine to sit on their floor could face charges alongside the companies that own the equipment.

"Crypto ATMs are very often used in scams, especially ones that target seniors in our state," Reedy said when the bill advanced.

A National Fraud Crisis Driving State Action

The bill arrives as federal data shows crypto kiosk fraud accelerating sharply. According to the FBI's Internet Crime Complaint Center, Americans filed 13,460 complaints related to crypto ATM fraud in 2025, with total losses reaching $389 million. That figure represents a 58% increase in losses and a 23% rise in complaints compared to 2024. Adults 60 and older account for more than 80% of those losses. In 2025 alone, older Americans reported $257.4 million in kiosk-related losses across 6,188 complaints.

The typical fraud pattern involves scammers, often posing as tech-support agents or government officials, instructing victims to deposit cash into a kiosk to resolve a fabricated emergency. An 80-year-old woman named Marlene Betesh lost $9,500 after a scammer directed her to use one of the machines. The average individual loss at a crypto kiosk runs approximately $11,000.

Tennessee legislators cited in floor debate figures suggesting 80 to 85 percent of kiosk transactions in the state showed fraud indicators, a figure consistent with regulatory findings from Iowa and Washington D.C., where authorities found similar patterns in over 90% of transactions.

Indiana Set the Template

Indiana became the first state to impose a full ban when Governor Mike Braun signed equivalent legislation on March 9, 2026, under an emergency declaration that made it effective the following day. The law sidelined roughly 800 kiosks across the state, including 77 machines operated by Bitcoin Depot in Evansville alone. Bitcoin Depot, the world's largest crypto ATM operator with more than 24,000 locations globally, remotely deactivated those machines voluntarily.

Indiana's legislation evolved from an initial regulatory framework proposal into an outright ban after law enforcement presented evidence of accelerating fraud. Rep. Wendy McNamara, one of the bill's authors, pointed to a near-total absence of regulatory oversight, while Sen. Scott Baldwin argued the machines served no legitimate use case that could not be addressed through safer alternatives. Lawmakers also noted that fraud reports had doubled each year for four consecutive years before the ban took effect.

A Widening Regulatory Wave

Tennessee and Indiana are not isolated cases. At least 20 U.S. states have now passed some form of restrictive legislation targeting crypto kiosks, according to the ABA Banking Journal. Approaches vary: South Dakota capped daily transactions at $1,000 and monthly transactions at $10,000; Wisconsin and Virginia imposed daily limits combined with mandatory reimbursement for fraud victims; and Maine secured a $1.9 million settlement from Bitcoin Depot to compensate people who had been defrauded. Wyoming, widely regarded as one of the most crypto-friendly states in the country, established a full regulatory framework requiring machines to comply with state money transmitter law, a sign that concern over kiosk fraud has spread well beyond states skeptical of digital assets.

At the federal level, the U.S. Financial Crimes Enforcement Network issued a formal notice (Notice FIN-2025-NTC1) in August 2025 directing banks to file Bank Secrecy Act Suspicious Activity Reports when cash-to-wallet kiosk transfers show signs of fraud. A companion bill in Congress, the Crypto ATM Fraud Prevention Act of 2025, was introduced in the Senate as S.710.

What It Means for Emerging Markets

For most of the world, the Tennessee and Indiana bans are primarily a regulatory signal rather than a direct disruption. North America accounts for approximately 88.7% of the global crypto ATM installed base, which stands at roughly 30,000 machines in the United States. Crypto access in Sub-Saharan Africa, South Asia, and Southeast Asia is predominantly mobile and exchange-based, not kiosk-driven.

Sub-Saharan Africa recorded $205 billion in on-chain transaction volume, representing 52% year-over-year growth through mid-2025, according to Chainalysis. Nigeria and Ethiopia rank in the top 15 of the 2025 Global Crypto Adoption Index. South Africa represents a distinct sub-market within the region: 17.2% of its mobile crypto transactions are conducted via stablecoins, a proportion that reflects a more mature digital-asset infrastructure than most neighboring countries. India and Vietnam are among the fastest-growing markets in Asia-Pacific, with the region recording a 69% year-over-year rise in on-chain transaction value. India's regulatory environment adds further complexity, as the country enforces a 30% capital gains tax on crypto income plus a 1% tax deducted at source on transactions, while Pakistan's State Bank has historically restricted crypto exchanges.

Regulators in Kenya, South Africa, Nigeria, India, and Pakistan are all at varying stages of drafting crypto frameworks in 2026. The U.S. fraud data and Tennessee's host-liability model offer concrete reference points for officials deciding whether to permit physical cash-to-crypto infrastructure at all. If state-level bans continue to spread across the United States, operators such as Bitcoin Depot may also look toward emerging markets for growth, which could accelerate the policy debate in those regions considerably.

What Comes Next

The bill now awaits Governor Lee's signature. If he signs it, operators will have until July 1 to remove or deactivate machines. State-by-state bans, by their nature, leave gaps along state borders that only a national standard can close, a limitation that has renewed congressional attention on the Crypto ATM Fraud Prevention Act, introduced in the Senate as S.710.