California court enforces $1,000 withdrawal limit for crypto ATMs

A recent decision by a California Superior Court has maintained the Digital Financial Assets Law (DFAL), which enforces a $1,000 cap on daily withdrawals from cryptocurrency ATMs, also known as "crypto kiosks," throughout the state. 

The ruling, delivered by the Superior Court for Los Angeles County, supports the California Department of Financial Protection and Innovation’s (DFPI) efforts to protect consumers and regulate the usage of these machines. 

The decision followed a lawsuit from the Alliance for the Fair Access to Cryptocurrency Terminals, which argued that the DFAL's withdrawal limit was unreasonable and exceeded the Legislature's authority. 

However, the court found the daily cap on withdrawals to be a reasonable method for "limiting fraud." 

The DFPI emphasised that this limit is crucial for consumer protection and to prevent the misuse of these machines for illicit purposes. 

DFPI Commissioner Clothilde Hewlett highlighted the importance of these rules, stating: “The law’s common-sense restrictions, including a $1,000 daily limit at crypto kiosks, protect consumers from fraudulent transactions and limit the use of kiosks for illicit purposes.” 

She reiterated that “the Department will continue implementing this important legislation, which will strengthen responsible innovation in the state’s crypto industry and protect Californians.” 

Besides the withdrawal limit, the DFAL includes additional provisions for crypto ATM operators, such as restrictions on fees they may charge, requirements for new disclosures, and the obligation to obtain a DFAL license. 

This regulatory framework, which was signed into law in October 2023, will come into effect in July 2025. 

The court’s ruling reflects California's approach to regulating the rapidly expanding crypto industry by ensuring consumer safety while fostering a responsible environment for digital financial assets. 

The ongoing enforcement of these regulations by the DFPI seeks to balance innovation with robust consumer protection in the evolving financial landscape.