How California’s $1K Crypto ATM Withdrawal Cap Aims to Combat Scams

Digital Financial Asset Transaction Kiosks

California legislators have recently proposed a bill titled “Digital financial asset transaction kiosks”, which would limit crypto ATM withdrawals to $1,000 per day, and set a cap on operators’ fees at $5 or 15% (whichever is higher), starting in 2025. This proposed law would come into effect on the 1st of January 2024.

The bill was introduced after legislators visited a crypto ATM in Sacramento and discovered markups as high as 33% compared to the prices on crypto exchanges. On average, a crypto ATM charges fees between 12% and 25%, as stated in a legislative analysis.

Government officials also found ATMs with withdrawal limits as high as $50,000, which prompted them to take regulatory measures to prevent such high premiums and withdrawal limits. According to Coin ATM Radar, there are more than 3,200 Bitcoin ATMs in California.

Democratic State Senator Monique Limón, who co-authored the proposed legislation, stated that the “new bill is about ensuring that people who have been frauded in our communities don’t continue to watch our state step aside” when there are real issues happening.

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Crypto ATMs and California Department of Financial Protection and Innovation Bill

The California Department of Financial Protection and Innovation recently proposed a bill that would require digital financial asset businesses to obtain a license by July 2025. This bill is seen by some as a way to protect victims of crypto ATM scams, as it would limit the amount of cash that can be deposited in a single transaction and give victims time to realize if they are being duped.

Crypto ATMs are a popular way for people to exchange cash for their choice of cryptocurrency, but due to the nature of transactions (i.e., hard cash), they are often a hub for scams and exploits. Unlike bank and wire transfers, each transaction leaves less of a trail.

On the other hand, small crypto ATM operators have expressed concern over the bill, as it would require them to pay rent on their ATMs and does not address the core issue of fraud. They argue that the bill would shutter the industry and hurt consumers while doing nothing to stop bad actors.

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