California legislators are pushing for a new bill titled “Digital financial asset transaction kiosks.” The proposed legislation aims to impose a cap of $1,000 per day on crypto ATM withdrawals. This is in a response to a recent legislative investigation that unearthed exorbitant premiums and high withdrawal limits.
Legislative Investigation and Proposed Measures
The legislative impetus behind the bill came after members conducted an investigation at a crypto ATM in Sacramento. Shockingly, they discovered markups reaching as high as 33% on certain crypto assets compared to their market prices on exchanges. On average, crypto ATMs were found to charge fees ranging between 12% and 25%, according to a thorough legislative analysis.
In response to the alarming findings, California legislators are proposing a cap on crypto ATM withdrawals at $1,000 per day, effective from January 1, 2024. Additionally, starting in 2025, operators’ fees would be restricted to $5 or 15%, opting for the higher value.
The move aims to curtail the excessive premiums and withdrawal limits. Currently, more than 3,200 Bitcoin ATMs are operating in California according to data from Coin ATM Radar.
Democratic State Senator Monique Limón Advocates for Consumer Protection
Co-author of the proposed legislation, Democratic State Senator Monique Limón, emphasizes that the bill is designed to protect individuals in communities who have fallen victim to fraud. She asserts that the state should not stand idly by when real issues affect its citizens, signaling a proactive stance against fraudulent practices.
Regulatory Licensing and Balancing Perspectives
The bill introduces a significant provision mandating digital financial asset businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025. This regulatory requirement aims to instill accountability and oversight within the industry. Further, it will address concerns raised by the rampant scams associated with crypto ATMs.
While some residents affected by ATM scams applaud the bill for its potential to give victims time to realize they are being duped, crypto ATM businesses express concerns. Critics argue that the proposed legislation could disproportionately harm small operators, who already contend with operational costs such as rent for their ATMs.
They emphasize that the bill does not address the core issue of fraud. However, it takes a punitive approach focused on specific technology, potentially causing repercussions for the entire industry.