Governor Gavin Newsom recently signed a bill imposing a $1,000 per person per day limit on cryptocurrency ATM transactions in California, starting in January, as reported by the Los Angeles Times.
“An operator shall not accept or dispense more than one thousand dollars ($1,000) in a day from or to a customer via a digital financial asset transaction kiosk,” states the new law.
This is part of a broader effort by the state of California to regulate the cryptocurrency industry, with the new Digital Financial Assets Law set to come into effect in 2025.
In addition to the law limiting crypto ATM transactions, the Digital Financial Assets Law will require crypto firms to obtain a license from the state and adhere to strict auditing and record-keeping requirements. The shift in Newsom’s position indicates that he is now willing to regulate the crypto industry in a way that he was not before.
The new limit on Bitcoin ATM transactions aims to help protect consumers from fraud by providing them more time to recognize scams before transferring large sums of cash. For example, scammers tricked one San Jose man into transferring $15,000 into a Bitcoin ATM.
While the crypto industry has raised concerns that the new law will be harmful to consumers, consumer groups argue that it is necessary to prevent increasing levels of fraud related to cryptocurrency ATMs. The Federal Trade Commission reported that 46,000 people lost over $1 billion in crypto scams in the last year.
According to the Los Angeles Times, California hosts over 3,200 Bitcoin ATMs.
According to the new law, Assembly Bill 39, a “digital financial asset transaction kiosk” is a device that allows users to buy or sell cryptocurrency using cash.
Starting January 1, 2025, the new law will impose a cap on the fees that operators of digital financial asset transaction kiosks can charge. These fees will not be allowed to be higher than $5 or 15% of the transaction, whichever is greater.
Operators of digital financial asset transaction kiosks will be required to provide clear disclosures on the details of each transaction, including the crypto amount, dollar amount, fees, and the difference between the operator’s price and the price on a licensed crypto exchange.
The new law also requires that customers receive a receipt with complete information about the transaction, including the name of the licensed crypto exchange used to calculate the price spread.
In addition to the other requirements, the new law will require operators to provide the California Department of Financial Protection and Innovation with a list of all kiosk locations and to update the list within 30 days of any changes.
However, once the law comes into full effect, after July 1, 2025, operators of these kiosks will need to have either a state crypto license or ensure that any third parties using their kiosks are licensed.
The new law is intended to increase oversight and transparency around cryptocurrency ATM transactions in California. However, this law will only be enacted if a broader crypto regulatory bill, AB 39, is passed by January 1, 2024.
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