California Restricts Crypto ATM Transactions to Prevent Fraud

Bitcoin ATM. (Photo; Doc. BitcoinGR)

JAKARTA – California officials are acting decisively in dealing with fraud involving Bitcoin ATMs, which has cost victims thousands of dollars. This step is a response to increasing cases of fraud involving crypto machines.

Starting next January, transactions via cryptocurrency ATMs in California will be limited to 1,000 US dollars (IDR 15.8 million) per person per day. This is stated in the new law that has been signed by Governor Gavin Newsom.

This law asserts that "Operators may not receive or disburse more than one thousand dollars (1,000 US dollars) in a day from or to customers through digital financial asset transaction kiosks."

California is set to implement stricter regulations for crypto companies in 2025 under the Digital Financial Assets Act newly approved by Governor Newsom. This will require crypto companies to obtain state licenses and comply with strict auditing and record-keeping rules.

Bitcoin ATM transaction limits are intended to provide greater protection to fraud victims. With these limitations, victims have more time to realize that they may be the target of a scam before they transfer large amounts of cash into cryptocurrency.

Tackling Fraud

While crypto industry advocates argue that these laws will harm consumers, consumer groups argue that these laws are necessary to address the increasing fraud associated with cryptocurrency ATMs.

According to the Federal Trade Commission, more than 46,000 people reported losing more than 1 billion US dollars (IDR 15.8 trillion) in crypto scams last year. Currently, more than 3,200 Bitcoin ATMs operate in California.

The specifications of the new law, known as Assembly Bill 39, define 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 US dollars  or 15% of the transaction, whichever is greater.

Operators must provide customers with complete information regarding the terms and conditions of each transaction, including the amount of crypto, dollar amount, fees charged, and the difference between the price they offer and the price on a licensed crypto exchange.

Customers will also receive a receipt detailing transaction information, including the name of the licensed exchange used to calculate the price difference.

Operators will be required to provide a list of all their kiosk locations to the California Department of Financial Protection and Innovation and update the list within 30 days of any changes.

Additionally, the law also stipulates that after July 1, 2025, operators must comply with California's digital asset business licensing requirements or ensure third parties using their kiosks have obtained a crypto license from the state.

All of these steps aim to increase oversight and transparency around cryptocurrency ATM transactions in California. It is important to remember that this law will only take effect if the broader crypto regulatory bill, AB 39, is enacted on January 1 next year.