California introduces a new state-level legislation to regulate the operation of Bitcoin ATMs, aiming to curb fraud and enhance transparency. Effective from July 2025, this law will impose stringent requirements on Bitcoin ATM operators and store owners, bringing them under a regulatory framework similar to that of traditional financial institutions.
Deposit Limitations to Prevent Fraud
One of the key provisions of the legislation is the imposition of deposit limitations, with daily deposits capped at $1,000. This measure is intended to prevent large-scale fraudulent transactions and limit potential losses. Additionally, operational transparency will be enhanced, as operators are now required to disclose their names and provide mandatory receipts for every transaction conducted at their machines.
The legislation also introduces stricter business structuring requirements. Bitcoin ATM operators will need to publicly list their assets and liabilities, undergo regular audits, and provide detailed employment histories. This move aims to increase accountability and ensure that operators are financially stable and compliant with industry standards.
Licensing and Compliance Under the New Law
Licensing and compliance will be tightly regulated under the new law. Operators must obtain special licenses and adhere to rigorous standards, including fingerprinting and public reporting of any convictions or bankruptcies. These measures are designed to mitigate fraudulent activities and enhance consumer trust in the use of Bitcoin ATMs.
Andy Pickett, the Chief Administrative Officer, highlighted that each local jurisdiction will need to pass their own ordinances to regulate Bitcoin ATMs. However, he anticipates that the comprehensive state regulations will address most concerns without the need for additional local action.
California’s AB39 Bill
Several states, including California, have introduced specific regulatory frameworks for Bitcoin ATMs. California’s AB39 bill mandates that operators obtain state-specific licenses and comply with stringent requirements such as detailed reporting, annual renewals, and random state examinations. This move is part of a broader trend towards treating Bitcoin ATMs more like traditional financial institutions to ensure robust oversight and security.
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In the United Kingdom, the Financial Conduct Authority (FCA) has been actively targeting unregistered cryptocurrency ATMs throughout 2023. Since January, the FCA, in collaboration with various law enforcement agencies, has inspected 34 locations suspected of hosting illegal crypto ATMs. This crackdown has resulted in the disruption of 26 machines operating unlawfully.
