After analyzing the rising fraud in the crypto sector, regulators of California have introduced a measure called “Digital Financial Asset Transaction Kiosks.” The measure states that the daily transaction limit from cryptocurrency ATMs is $1,000.
A limitation for operation fees is also figured out in the proposed bill, and the bill is estimated to be regulated starting in 2025. If enacted, the implementation of these regulations is slated to commence on January 1, 2024.
The legislation came into existence following the visit of legislative members to a cryptocurrency ATM installed in Sacramento.
While traveling, authorities markups on specific cryptocurrencies that were as much as 33% more than their price on a cryptocurrency exchange.
The investigation of legislative members states that the fees charged by crypto ATMs oscillated between 12% and 25% on average. However, the authorities discovered a crypto ATM with withdrawal limits soaring as high as $50K which led them to regulatory action to truncate such elevated premiums and withdrawal limits.
The data of CoinATMRadar reveals that 3,200 ATMs in California are accepting Bitcoin, and the necessity for regulation is becoming increasingly palpable. Additionally, the legislation will mandate companies dealing in digital financial assets to obtain a license from the Department of Financial Protection in California by the end of 2025.
The nature of crypto ATM transactions (exchanging cash for crypto) has made these kiosks a breeding ground for fraud and exploitation, as well as a preferred way for consumers to exchange money using their favorite cryptocurrency.
The lack of a significant paper trail in each transaction, compared to traditional banking, including wire transactions, further increases the likelihood of fraudulent activity.
Recently, many locals have fallen victim to scams in which scammers convince victims to deposit money into nearby crypto ATMs in exchange for cryptocurrency.
How Crypto ATMs Installation Surged in the Past Years?
When writing data of coinatmradar(dot)com states that there are a total of 32789 crypto ATMs globally. North America has the highest number of crypto ATMs followed by the United States with 26,957 ATMs.
BITCOIN DEPOT is one of the most prominent crypto ATMs operators on the global level, followed by COINFLIP, BITSTOP, RockItCoin, Coinhub, ATHENA, Localcoin, and a few others.
Bitcoin Depot has more than 6200 functional crypto ATMs globally, the top 10 operators run 22186 crypto ATMs and the remaining 490 operators run 10589 ATMs amounting to 32.2%.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational ideas only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/10/25/what-does-crypto-atm-regulation-of-california-states/