California Legislators Aim to Limit Crypto ATM Withdrawals to Combat Rising Scams
Summary:
Lawmakers in California have proposed a bill to restrict daily withdrawals from crypto ATMs to $1,000 to combat increasing scams. The bill, named "Digital financial asset transaction kiosks," also proposes capping ATM operator's fees to either $5 or 15% (whichever is higher) starting from 2025. If passed, the measures would be implemented from January 1, 2024. The bill, spurred by high markups at crypto ATMs, also requires digital finance businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025. The proposal has received mixed reactions from fraud victims and operators alike.
In a move to curb increasing scams related to cryptocurrency, lawmakers in California have presented a bill named "Digital financial asset transaction kiosks," proposing a maximum daily withdrawal limit of $1,000 from crypto ATMs. The bill also recommends capping the fees charged by operators to either $5 or 15% - whichever amount is larger, from 2025 onward. If passed, the law would be enforced from the start of 2024. The proposition was triggered by high markups up to 33% on various crypto assets compared to their exchange market prices, observed at a crypto ATM in Sacramento. Generally, the fee charged by a crypto ATM lies in the range of 12% to 25%, as per a legislative review. Furthermore, certain ATMs were found to have excessive limits of $50,000 that spurred the need for such regulation. Over 3,200 Bitcoin (BTC) ATMs are operational across California as per Coin ATM Radar's data. Democratic Senator Monique Limón, the co-sponsor of this potential legislation, emphasized its role in protecting those who've been defrauded. Another clause within the proposed bill would necessitate digital finance businesses to secure a license from the California Department of Financial Protection and Innovation by July 2025. Crypto ATMs are prevalently used for converting cash into a preferred cryptocurrency, yet they are prone to misuse and scams due to the non-traceable nature of the transactions. The bill's proposition has been positively received by victims of such scams, who believe the reduced transaction limit will provide them with the opportunity to recognize any fraudulent activities. However, crypto ATM businesses argue that this could adversely affect smaller operators, who still have to cover ATM rental costs. They also claim that the bill does not effectively address fraud, instead imposing strict regulations on a specific technology could potentially hurt consumers while not effectively curtailing malpractices.
Published At
10/23/2023 3:37:37 PM
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