California lawmakers propose a new bill Titled “Digital Financial Asset Trading Kiosks,” it calls for cryptocurrency ATM withdrawals to be capped at $1,000 per day in light of rising scams. Additionally, starting in 2025, the law will limit carrier fees to $5 or 15%, whichever is higher. If approved, the bill will take effect on January 1, 2024.
The bill was introduced after legislators visited a crypto ATM machine in Sacramento and discovered markups of up to 33% on certain crypto assets compared to prices on cryptocurrency exchanges. According to legislative analysis, cryptocurrency ATMs charge fees of between 12% and 25% on average.
Government officials also found ATM limits as high as $50,000, prompting them to take regulatory action to curb such high premiums and withdrawal limits. There are over 3,200 Bitcoin (BTC) ATMs in California, according to Coin ATM Radar.
“The new bill is about ensuring that people in our community who have been defrauded do not continue to watch our state stand aside while real problems occur,” said Democratic state Sen. Monique Limon, who co-authored the proposed legislation. .
Another provision of the bill would require digital financial asset businesses to obtain licenses from the California Department of Financial Protection and Innovation by July 2025
Cryptocurrency ATMs are a popular way for people to exchange cash for their cryptocurrency of choice, but due to the nature of the transaction (i.e. cash), it has become a center for scams and exploitation. Unlike banks and wire transfers, this eliminates the possibility of leaving a trace.
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Some residents have recently fallen for such scams, where scammers convince victims to go to a nearby cryptocurrency ATM and deposit cash to buy the cryptocurrency of their choice. Victims of ATM scams have applauded the move and said the low transaction limits will give them time to realize if they have been scammed, report Los Angeles Times.
Cryptocurrency ATM businesses, on the other hand, say the new bill will hurt small operators who have to pay rent for their ATMs. Industry players point out that the bill fails to address the core problem of fraud and instead takes a punitive approach that targets specific technologies. They warned the move would shock the industry and harm consumers while failing to deter bad actors.
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