Chico, California, a city in Butte County, is preparing for new regulations regarding Bitcoin ATMs as part of statewide efforts to implement comprehensive crypto regulations by 2025. The state of California is home to 2,872 crypto ATMs, with Chico alone having 347 active machines, surpassing the total number of ATMs in some major economies like Hong Kong.
A recent report from a California legislative investigation in October 2023 revealed that some Bitcoin ATMs in the region were charging exorbitant fees, with premiums as high as 33%. Additionally, these ATMs allowed transactions up to $50,000, raising concerns about potential fraud and consumer exploitation.
In response to these issues, Governor Gavin Newsom signed the Digital Financial Assets Law in October 2023, which includes regulations for Bitcoin ATMs. The new legislation, set to take effect in July 2025, imposes strict rules such as capping daily deposits at $1,000, requiring receipt issuance, and disclosing operator details. These regulations will treat Bitcoin ATMs more like traditional banking institutions, mandating special registration, public listing of assets and liabilities, reporting of convictions or bankruptcies, and regular audits.
Andy Pickett, the Chief Administrative Officer of Butte County, emphasized the importance of local ordinances in enforcing these regulations effectively. Each jurisdiction will need to create and enforce its own rules to regulate Bitcoin ATMs.
Despite the increasing regulations, the global number of active Bitcoin ATMs has been on the decline since May, with 660 machines removed from the network in July alone. This decrease is attributed to factors such as a drop in enthusiasm for cryptocurrencies amid a market downturn. Bitcoin, the leading cryptocurrency, has seen its value fall more than 22% from its all-time high in March, with prices dipping below $50,000 in recent months.
However, there has been some market recovery, with Bitcoin currently trading around $57,000. As Chico, California, prepares for new Bitcoin ATM rules, it reflects a broader trend of increased regulation and oversight in the cryptocurrency industry to protect consumers and prevent fraud.