California Looks to Cap Crypto ATM Withdrawals to combat the threat of crypto scams. The Legislature in California has proposed the introduction of a new Bill named Digital Financial Assets Transaction Kiosks. This Bill aims to limit the amount of ATM withdrawals to $1000 per day. Furthermore, the Government targets to limit the fees of the operators to $5 or 15%, whichever is higher, and this would start from the year 2025.
The Digital Financial Assets Transaction Kiosks Bill
Starting in 2025, the Bill mandates that before any digital financial asset transaction, the operator has to submit a written disclosure, which must contain the terms and conditions of the said transaction. Most importantly, it should include the specific amount involved in the transaction. The Bill further makes it mandatory that every operator has to provide its customers with the receipt of the transaction, which must contain all the relevant and necessary information regarding the digital transaction. If the receipt does not contain the name of the customer and the date and time of the transaction, the receipt shall be deemed to be an invalid one. The Bill shall also compel the operator to provide detailed information about the locations of the transaction kiosks that are owned, operated, or managed by the operator in the state of California.
One of the key features of the Bill that is garnering support from the affected residents is the imposition of a low transaction limit on cryptocurrency ATMs. The proposed low limit is expected to provide potential victims with a crucial window of opportunity to recognize and thwart fraudulent attempts.
What’s the necessity of California to cap crypto ATM withdrawals?
California looks to cap crypto ATM withdrawals because of the widespread popularity of Cryptocurrency ATMs in recent years, providing a quick and accessible method for individuals to buy and sell digital currencies. However, their convenience has also attracted fraudulent actors who exploit the lack of regulatory oversight and consumer protection in this space.
The Legislature in California looks to cap crypto ATM withdrawals after an official visit to a Crypto ATM in California. The legislative member was surprised to find markups that are as high as 33% on certain assets compared to their original prices on the Crypto market. This came as a surprise as usually a crypto atm charges fees between 12% to 25%. The authority was also surprised to find that certain ATMs had a limit of $50,000, which is exceedingly high. Considering the fact that there are more than 3000 Bitcoin ATMs in California, such regulatory steps when necessary.
The modus operandi of these scams is both cunning and insidious. Scammers persuade victims to visit a nearby cryptocurrency ATM and deposit cash to acquire the cryptocurrency of their choice. Unbeknownst to the victims, their funds are swiftly siphoned off by the fraudsters.
According to reports from the LA Times, individuals who have fallen prey to these scams have voiced their approval for the Bill. They acknowledge that a reduced transaction limit could be instrumental in preventing hasty and impulsive financial decisions that often result in substantial losses. The co-author of the proposed Bill, Monique Limón (Democratic State Senator), stated that this new Bill was necessary in order to regulate digital financial assets.
In order to cap ATM withdrawals, California has mandated that before the ratification of the Bill in 2024, all the ATM operators have to make the necessary changes before 2025, and they must provide a 12-month transition period for these virtual asset service providers. The operators must obtain a license from the Department of Financial Protection and Innovation by the year 2025.