“California takes a proactive stance against fraud by strategically limiting Bitcoin ATM transactions to $1,000 per day, ensuring a safer and more secure digital currency landscape.”
California is taking action against scams involving Bitcoin ATMs that have defrauded victims out of thousands of dollars. To combat this issue, a new law signed by Governor Gavin Newsom will limit cryptocurrency ATM transactions to $1,000 per person per day starting in January. This move aims to give fraud victims more time to realize they are being scammed before transferring large sums of cash into cryptocurrency, which is difficult to trace.
The new law is part of a broader regulatory framework for cryptocurrency companies in California. Under the Digital Financial Assets Law approved by Newsom, crypto firms will be required to obtain a state license and adhere to strict auditing and record-keeping requirements by 2025. This shift marks a change for Newsom, who previously vetoed a crypto regulation bill due to concerns about adapting to the evolving landscape.
While some argue that the law will negatively impact consumers, consumer groups believe it is necessary to combat the increasing fraud associated with cryptocurrency ATMs. According to the Federal Trade Commission, more than 46,000 people reported losing over $1 billion in crypto scams last year. Currently, there are over 3,200 bitcoin ATMs operating in California.
The legislation, Assembly Bill 39, defines a “digital financial asset transaction kiosk” as a device that accepts or dispenses cash in exchange for cryptocurrency. Starting in 2025, operators of these machines will be prohibited from charging fees higher than $5 or 15% of the transaction, whichever is greater. They will also be required to provide customers with disclosures on the terms and conditions of each transaction and give them a receipt detailing the transaction information.
To increase oversight and transparency, operators will need to provide the California Department of Financial Protection and Innovation with a list of all kiosk locations and comply with the state’s digital asset business licensing requirements. However, these measures will only go into effect if the broader crypto regulatory bill AB 39 is enacted by January 1, 2024.
Overall, the new law and regulatory framework in California aim to protect consumers from cryptocurrency scams while still allowing for the growth and innovation of the crypto industry.