California legislators have recently presented a new bill under the name “Digital financial asset transaction kiosks.”
This bill aims to address the rising concerns over scams associated with crypto ATM transactions.
It proposes a daily withdrawal cap of $1,000 and seeks to limit operators’ fees to either $5 or 15%, commencing in 2025 under Senate Bill 401.
The bill is slated to take effect from the 1st of January 2024.
An additional provision in the bill mandates digital financial asset businesses to secure a license from the California Department of Financial Protection and Innovation by July 2025.
Democratic State Senator Monique Limón, a co-author of the bill, emphasised the necessity of the legislation in preventing continued exploitation of individuals within the community.
She stated,
“The new bill is about ensuring that people who have been frauded in our communities don’t continue to watch our state step aside”
An additional provision in the bill mandates digital financial asset businesses to secure a license from the California Department of Financial Protection and Innovation by July 2025.
Crypto ATM
The proposal emerged following a visit by legislative members to a crypto ATM in Sacramento, where they discovered
a markups of up to 33% on specific crypto assets in comparison to their prices on digital currency exchanges.
According to a legislative analysis, the average fees imposed by a crypto ATM range between 12% and 25%.
High withdrawal limits, reaching as much as $50,000, were also observed, prompting officials to intervene with regulatory measures to control excessive premiums and withdrawal thresholds.
Notably, California hosts over 3,200 Bitcoin ATMs, according to Coin ATM Radar.
Crypto ATMs have gained popularity as a means for individuals to convert cash into various cryptocurrencies.
Risks Involved
However, due to the nature of these transactions, involving physical cash, they have also become susceptible to scams and exploitative practices.
Each transaction is less traceable compared to traditional banking methods or wire transfers.
Some residents have fallen victim to scams, whereby scammers coax the victims into visiting a nearby crypto ATM and depositing cash for the desired cryptocurrency.
Conflicting Views
Reports from the LA Times indicate that some affected individuals have welcomed the bill, suggesting that the lower transaction limit would provide them with sufficient time to realise if they are being deceived.
Conversely, some representatives from crypto ATM businesses have expressed concerns that the bill could disproportionately impact small operators who bear rental costs for their ATMs.
Charles Belle, executive director of the Blockchain Advocacy Coalition, mentioned:
“This bill fails to adequately address how to crack down on fraud, and instead takes a punitive path focused on a specific technology that will shudder the industry and hurt consumers, while doing nothing to stop bad actors,”
* Original content written by Coinlive. Coinbold is licensed to distribute this content by Coinlive.
