- within Compliance topic(s)
On October 30, the California DFPI announced a consent order against a Nevada-based crypto kiosk operator for alleged violations of the Digital Financial Assets Law and the California Consumer Financial Protection Law.The action follows a DFPI investigation into widespread noncompliance among crypto ATM operators, which the agency has identified as a growing consumer-protection concern.
The DFPI alleged that the company operated digital asset kiosks in California without complying with key provisions of the Digital Financial Assets Law. Specifically, the agency alleges that the company:
- Accepted cash transactions exceeding the legal daily limit.The DFPI found that, since January 2024, the company processed multiple transactions above the $1,000 limit established by the Digital Financial Assets Law, with several exceeding $10,000 and involving older consumers.
- Charged consumers fees above the lawful maximum.For a period after January 1, 2025, the company collected charges exceeding the 15 percent cap set under the Digital Financial Assets Law, which limits permissible markups on digital asset transactions.
- Failed to provide required disclosures and accurate receipts.The DFPI determined that the company violated the Digital Financial Assets Law by omitting key pre-transaction disclosures and failing to include required information on receipts, such as the operator's name and the digital asset exchange used to determine pricing spreads.
Following these findings, the company agreed to pay $675,000 in total penalties and restitution, including $105,000 to reimburse California consumers who were overcharged.The order also requires the company to submit compliance reports every 60 days for one year and notify affected customers of their eligibility for restitution.
Putting It Into Practice: California continues to intensify enforcement against crypto ATM operators under the Digital Financial Assets Law and the California Consumer Financial Protection Law (previously discussed here and here).With other states recently enacting crypto kiosk regulations (previously discussed here and here), the DFPI's order highlights growing coordination among state regulators to standardize consumer protections in cash-to-crypto transactions. Crypto kiosk operators and digital asset providers should reassess compliance programs, audit kiosk operations, and ensure adherence to the state's fee, transaction, and disclosure requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
