Tennessee has become the second U.S. state to fully ban cryptocurrency ATMs, following Indiana, as Governor Bill Lee signed a bill prohibiting their operation. The legislation, HB 2505, classifies the installation or operation of a "virtual currency kiosk" as a Class A misdemeanor, carrying penalties of up to one year in prison and a $2,500 fine. This law will be enforced starting July 1, and merchants hosting such devices will also face legal consequences.While most states have opted for increased oversight through licensing and transaction limits, outright bans like Tennessee's remain uncommon. Since 2026, 30 states have introduced related legislation, with 20 states enacting laws to address cryptocurrency ATM fraud risks.