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.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.
How Far Are States Willing to Go Against Crypto ATMs?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:
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.
