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California’s Department of Financial Protection and Innovation (DFPI) has taken decisive action against Coinme, a Seattle-based crypto ATM operator, for violating state regulations on transaction limits and disclosure requirements.
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The enforcement marks the first application of California’s Digital Financial Assets Law, emphasizing the state’s commitment to protecting consumers from crypto-related fraud and ensuring compliance among kiosk operators.
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According to DFPI Commissioner KC Mohseni, this case “sends a strong message” that digital asset companies must adhere to rules designed to prevent scams targeting vulnerable Californians.
California’s DFPI fines Coinme $300,000 for breaching crypto ATM transaction limits and missing disclosures, marking a landmark enforcement under the Digital Financial Assets Law.
California’s Enforcement of Crypto ATM Regulations Highlights Consumer Protection
In a landmark enforcement action, California’s DFPI imposed a $300,000 penalty on Coinme for exceeding the state-mandated daily transaction cap of $1,000 per customer at its crypto ATMs. This regulatory limit, introduced under the Digital Financial Assets Law enacted in 2023, aims to curb fraudulent activities and protect consumers from excessive exposure to digital asset risks. Additionally, Coinme failed to provide mandatory disclosures on customer receipts at its kiosks, which are commonly found in grocery and convenience stores across California. These disclosures are critical for transparency and informed decision-making by users.
Impact of the Digital Financial Assets Law on Crypto Kiosk Operations
The Digital Financial Assets Law represents California’s proactive stance on regulating the rapidly evolving crypto ATM sector. By setting transaction limits and disclosure requirements, the law seeks to mitigate risks associated with crypto scams, which disproportionately affect elderly and vulnerable populations. The DFPI’s action against Coinme underscores the regulatory authority’s readiness to enforce compliance and hold operators accountable. This enforcement also includes restitution payments, such as the $51,700 awarded to an elderly resident who was defrauded, demonstrating tangible consumer protection outcomes.
Rising Crypto ATM Scams Spur Regulatory Responses Nationwide
Crypto ATM scams have surged, with fraudsters deceiving victims into purchasing cryptocurrencies and transferring funds directly to illicit wallets. The FBI reported nearly 11,000 complaints and losses exceeding $246 million in 2024 alone, marking a 31% increase from the previous year. Notably, two-thirds of these victims were over 60 years old, highlighting the vulnerability of senior citizens to such schemes. These alarming trends have prompted states like California to implement stringent regulations and enforcement actions to safeguard consumers.
Washington’s Ban on Crypto ATMs Reflects Growing Concern Over Fraud and Money Laundering
In a more stringent approach, Spokane, Washington’s second-largest city, recently banned crypto ATMs entirely. This measure aims to protect residents from scams and illicit financial flows, with local law enforcement citing concerns that funds deposited into crypto kiosks often end up in sanctioned or high-risk jurisdictions such as China, North Korea, and Russia. The ban reflects increasing scrutiny of crypto ATM networks amid fears of facilitating money laundering and other criminal activities.
International and Local Crackdowns on Crypto ATM Misuse
Beyond the United States, Australian federal police have intensified efforts to combat criminal exploitation of crypto ATMs, reaching out to over 90 individuals linked to fraud and “pig butchering” scams. Similarly, in Texas, a county sheriff physically disabled a crypto kiosk following a reported $25,000 scam affecting a local family. These actions illustrate a broader global trend of law enforcement agencies targeting the misuse of crypto ATMs to protect consumers and uphold financial integrity.
Future Outlook for Crypto ATM Regulation and Consumer Safety
As crypto ATM usage grows, regulatory bodies are expected to continue refining and enforcing rules to balance innovation with consumer protection. The California DFPI’s recent enforcement serves as a precedent, signaling that operators must prioritize compliance or face significant penalties. Consumers are encouraged to remain vigilant and informed when using crypto kiosks, while industry stakeholders should proactively adopt best practices to foster trust and security in digital asset transactions.
Conclusion
The DFPI’s enforcement against Coinme marks a pivotal moment in the regulation of crypto ATMs, emphasizing the importance of adhering to transaction limits and disclosure requirements to prevent fraud. With crypto ATM scams on the rise and jurisdictions like Washington imposing outright bans, regulatory scrutiny is intensifying nationwide and internationally. This evolving landscape underscores the necessity for robust compliance frameworks and heightened consumer awareness to ensure the safe and responsible use of crypto ATMs.
