Thursday, 18 July 2024
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CryptoCrypto Regulations

As fraud rates rise, California proposes regulations for cryptocurrency ATMs

  • Legislators in California have proposed to stop the rising tide of fraudulent activity.
  • The proposal calls for a $1,000 daily cap on withdrawals from cryptocurrency ATMs.
  • The regulations would go into effect on January 1, 2024, if they are passed.

Legislators in California have proposed a bill known as “Digital Financial Asset Transaction Kiosks” to stop the rising tide of fraudulent activity. The proposal calls for a $1,000 daily cap on withdrawals from cryptocurrency ATMs.

Additionally, starting in 2025, the bill would cap operators’ fees at $5 or 15%, whichever is higher. The regulations would go into effect on January 1, 2024, if they are passed.

Regulations for cryptocurrency ATMs

California lawmakers found markups on some cryptocurrencies at cryptocurrency ATMs that can be up to 33% higher than their exchange values, which prompted them to start drafting legislation.

These ATMs typically charge fees in the range of 12% to 25%. Reducing these premiums was the result of regulatory action after government agents found ATMs with withdrawal limits as high as $50,000.

Regulation is becoming more and more necessary, especially since over 3,200 ATMs in California are now accepting Bitcoin. A license from the California Department of Financial Protection and Innovation must be obtained by July 2025 for businesses that deal in digital financial assets, according to the law.

Since there is less of a paper trail for cryptocurrency ATM transactions than for traditional bank and wire transactions, they have turned into a haven for fraud and exploitation.

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