According to Cointelegraph, California legislators have proposed a new bill titled "Digital financial asset transaction kiosks," which aims to cap crypto ATM withdrawals at $1,000 per day to combat growing scams. If approved, the bill would come into effect on January 1, 2024, and starting in 2025, it would limit operators' fees to $5 or 15% (whichever is higher).
The bill was introduced after legislative members discovered markups as high as 33% on some crypto assets at a Sacramento ATM compared to their prices on crypto exchanges. On average, crypto ATMs charge fees between 12% and 25%. Government officials also found ATMs with limits as high as $50,000, prompting them to take regulatory measures to curb such high premiums and withdrawal limits. There are over 3,200 Bitcoin ATMs in California, according to Coin ATM Radar.
Democratic State Senator Monique Limón, who co-authored the proposed legislation, said the bill aims to ensure that people who have been defrauded in their communities don't continue to watch the state step aside when real issues are happening. Another provision of the bill would require digital financial asset businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025.
Crypto ATMs are a popular way for people to exchange cash for cryptocurrency but have become a hub for scams and exploits due to the nature of transactions (i.e., hard cash). Some residents have recently been caught up in such scams, where the scammer persuades the victim to go to a nearby crypto ATM and deposit cash for the crypto of their choice. Some of those affected by ATM scams have lauded the bill and said the low transaction limit would give victims time to realize if they are being duped, reported the LA Times.
However, crypto ATM businesses argue that the new bill would harm small operators who must pay rent on their ATMs. The operators noted that the bill fails to address the core issue of fraud and instead takes a punitive path focused on a specific technology. They warned that such a move would shutter the industry and hurt consumers while doing nothing to stop bad actors.
