Beware of Fraud! California Cryptocurrency ATMs have a daily limit of one thousand US dollars per person

California Governor Gavin Newsom has signed a new law that is expected to limit cryptocurrency ATMs in California to $1,000 per person per day starting from January next year, in an effort to prevent more cryptocurrency fraud cases.

Strengthening Regulation of Cryptocurrency ATMs to Prevent Fraud

Given that cryptocurrency scams often involve persuading individuals to deposit cash into cryptocurrency ATMs and then transfer it into untraceable cryptocurrencies, California Governor Gavin Newsom recently signed a new law restricting cryptocurrency ATM transactions to $1,000 per person per day. According to a report by the Los Angeles Times, there are currently over 3,200 Bitcoin ATMs operating in California, set up in convenience stores and gas stations as a way for people to quickly purchase cryptocurrencies with cash, leading to a rise in related fraud cases.

This new law aims to enhance the regulation and transparency of cryptocurrency ATM transactions in California. However, it will only take effect once the more comprehensive cryptocurrency regulation bill, Assembly Bill 39, is enacted by January 1, 2024.

The new Assembly Bill 39 defines "digital financial asset transaction kiosk" as devices that accept or dispense cash in exchange for cryptocurrencies, namely cryptocurrency ATMs. Starting from January 1, 2025, operators of these machines will be prohibited from charging fees exceeding $5 or 15% of the transaction amount.

Operators will also be required to disclose the terms and conditions of each transaction to customers, including the amount of cryptocurrency, the dollar amount, the fees charged, and the difference between the operator's price and the price from a licensed cryptocurrency exchange.

Ayman Rida, CEO of Cash2Bitcoin, stated that cryptocurrency ATM operators are not opposed to clearer rules and guidelines but are against fee and transaction limits. If a customer conducts a transaction exceeding $1,000, cryptocurrency ATM operators typically require additional forms of identification and may flag high-value transactions in some cases, which may help deter fraudsters.

Scammers are becoming increasingly sophisticated, and fraud occurs in other industries as well. Why aren't regulatory authorities taking similar actions?

California's "Digital Financial Asset Act" Leans Towards Stricter State Regulation

On October 13, California Governor Gavin Newsom signed the "Digital Financial Asset Act," which was passed by the state legislature in September 2022 and is set to take effect in July 2025. The "Digital Financial Asset Act" will require the California Department of Financial Protection and Innovation (DFPI) to establish a regulatory framework for cryptocurrencies, including a company licensing system, and empower the department to enforce and formulate regulations related to the cryptocurrency industry.

This is California's second attempt to establish a system similar to New York's "BitLicense." Previous efforts to regulate cryptocurrency businesses through AB-1326 legislation in 2015 were shelved and unsuccessful due to opposition from state senators.

While the bill has faced controversy since its proposal, recent legislators seem inclined towards stricter state regulation.