Web3 Meets Traditional Banking: California Imposes Limits on Crypto ATM Withdrawals
As many crypto enthusiasts worldwide know, the Web3 industry has evolved beyond just a decentralized ecosystem where converting assets into fiat currencies was challenging. Today, it also involves traditional banking systems, which now offer ways to convert cryptocurrency into convenient fiat currencies. Besides banks, centralized crypto exchanges like Bybit and Binance allow users to withdraw funds in fiat through ATMs and make payments with physical money. These innovations open new horizons for using cryptocurrencies daily, making them more accessible to a broader audience.
However, many people now realize that this approach can carry certain risks. First and foremost, this relates to money laundering and fraudulent schemes, which often accompany cryptocurrency transactions. Because of this, financial and legal authorities in various countries are working to introduce additional regulations and control measures. In this article, the Coinmooner team decided to cover one such initiative. It was recently announced that California authorities have decided to set limits on using crypto ATMs. This measure aims to protect users from fraud, reduce risks, and increase trust in cryptocurrencies as a financial tool.
Judicial authorities have supported the introduction of these restrictions, seeing them as a practical precaution. According to the court, these limits will help minimize the risks of crypto fraud and provide a higher level of protection for consumers interacting with crypto services. California authorities proposed the idea of introducing limits last fall, but earlier this year, the Alliance for Fair Access to Crypto ATMs filed a lawsuit, arguing that these measures are excessive and beyond legal authority.
California’s Digital Financial Assets Law: What It Means for Crypto ATM Operators and Users
Coinmooner always strives to go beyond merely covering events on the surface and delve deeper into topics to provide our readers with a more complete and exciting understanding of what’s happening. In light of the new regulatory restrictions in California, special attention has been given to the statements from DFPI Commissioner Clothilde Hewlett. She reassured the public that, despite the controversies surrounding the new measures, the actions aim to protect users from fraud and prevent the illegal use of crypto ATMs. These initiatives are designed to build trust in cryptocurrencies and create conditions for sustainable growth of the crypto ecosystem in the state, ensuring users' safety and transparency when conducting financial transactions.
Additionally, it's important to note that in October 2023, California passed the Digital Financial Assets Law (DFAL), which marked a significant step in regulating the cryptocurrency industry. Besides introducing daily limits on withdrawals through crypto ATMs, DFAL imposes strict limits on fees that operators of such machines can charge. Moreover, the law requires operators to fully disclose fee information to customers, which increases transparency and protects users' rights. According to the new rules, all crypto ATM operators must obtain a special license by July 2025, which is also aimed at strengthening control over operations and reducing fraud risks.
According to the U.S. Federal Trade Commission (FTC), since 2020, the number of fraud cases involving crypto ATMs has increased tenfold, with users' combined losses exceeding $110 million. This alarming growth has signaled to authorities the need for stricter control over cryptocurrency operations, mainly when using ATMs. Coinmooner will closely monitor further changes in the regulation of the crypto industry and promptly inform our readers of significant news. We also want to remind all users that in the Web3 world, security is of utmost importance. Adhering to all modern protection measures and using advanced security technologies helps safeguard your assets and contributes to creating a more reliable financial environment for all cryptocurrency community members.
