California has made headlines with its first enforcement action under the Digital Financial Assets Law (DFAL), fining crypto kiosk operator Coinme $300,000 for violations. Announced recently, this penalty marks a significant step in the state’s efforts to regulate the rapidly growing cryptocurrency sector. The DFPI (Department of Financial Protection and Innovation) targeted Coinme for breaching key provisions of the 2023 law, signaling a new era of oversight for digital asset businesses. This move not only highlights regulatory intent but also raises questions about compliance and consumer protection in the crypto ATM space.

Digital Financial Assets Law

Enacted in 2023 and effective from July 2025, the DFAL is California’s pioneering framework to govern digital financial asset activities. It mandates that businesses engaging with California residents, such as crypto kiosk operators, obtain a license from the DFPI. The law sets strict rules to safeguard consumers, including:

Transaction Limits : A daily cap of $1,000 per customer for crypto ATM transactions to curb excessive exposure to fraud.

Disclosure Obligations : Mandatory clear receipts detailing transaction fees, risks, and terms to ensure transparency.

Licensing and Compliance : Companies must maintain records, meet net worth requirements, and submit to regular audits, with penalties up to $20,000 per day for violations.

Stablecoin Oversight: Issuers must hold eligible securities equal to their outstanding stablecoins, subject to DFPI approval.

These requirements aim to mitigate risks from scams, which have cost Californians over $1.2 billion since 2023, and address the lack of prior regulation compared to states like New York with its BitLicense.

The DFAL’s focus on transaction limits and disclosures stems from the rise of crypto ATM scams, where fraudsters exploit kiosks to drain victims’ funds. By enforcing these rules, California seeks to protect vulnerable groups, especially seniors, who account for two-thirds of scam losses. The law also allows for restitution, as seen with Coinme’s $51,700 payment to a scammed elderly resident, adding a layer of accountability.

The Coinme Case

Coinme, a Seattle-based operator of crypto ATMs across California, faced the fine for allowing transactions exceeding the $1,000 daily limit and omitting required disclosures on receipts. This breach, the DFPI’s first under the DFAL, underscores the law’s teeth. The penalty, combined with restitution, serves as a warning to other operators that non-compliance carries steep consequences. It also reflects growing global trends, with cities like Spokane, Washington, banning crypto ATMs entirely due to fraud concerns.

For consumers, this enforcement highlights the importance of verifying kiosk compliance before use—look for clear receipts and stay within daily limits. For businesses, it’s a call to invest in robust compliance systems, potentially raising operational costs but reducing legal risks. The DFAL’s flexibility to exempt small-scale operators or innovative projects offers a balanced approach, encouraging growth while enforcing safety.

Broader Implications

Regulatory Ripple Effects

This fine could inspire other states to tighten crypto regulations, especially as scam losses climb—FBI data shows a 31% increase to $246 million in 2024. It may also push for national standards, though California’s lead positions the DFPI as a regulatory trendsetter. Critics argue the law might stifle innovation, but supporters see it as essential for mainstream adoption by building trust.

Practical Tips for Navigating Crypto ATMs

Check Limits : Confirm daily caps with the operator to avoid issues.

Review Receipts : Ensure all fees and terms are listed.

Report Suspicions: Contact the DFPI if a kiosk seems non-compliant.

As crypto ATMs proliferate, adherence to DFAL standards will be key to balancing convenience with security.

California’s $300,000 fine against Coinme marks a pivotal moment under the DFAL, emphasizing strict transaction limits and disclosure requirements. This enforcement not only protects consumers but also sets a precedent for the crypto industry’s future. With the law’s focus on transparency and accountability, businesses must adapt, while users gain clearer safeguards. As regulation evolves, this case could shape how digital assets are managed nationwide.

The California Department of Financial Protection and Innovation (DFPI) recently came down hard on Coinme, the Seattle-based operator of cryptocurrency kiosks. It seems they were the first to face enforcement under California’s Digital Financial Assets Law (DFAL). Apparently, Coinme didn’t play by the rules, allowing customers to pull out more than the $1,000 daily cap. They also forgot to give customers the required disclosures on their receipts, which is a big no-no.

Coinme has agreed to pay a $300,000 fine, including $51,700 in restitution to an elderly California resident who fell victim to their missteps. DFPI Commissioner KC Mohseni had a stern warning for kiosk operators: better adhere to regulations designed to keep consumers safe from scams.

How Are Crypto Kiosks Being Brought Under Control?

The regulatory landscape for crypto kiosks is rapidly changing, with California taking the lead. The DFAL is tightening the screws on kiosk operators, mandating daily transaction limits and mandatory disclosures. Other states like Illinois and Vermont are also getting in on the action to combat fraud and protect consumers, especially older Americans who might be more vulnerable.

These regulations are part of a larger move to bolster consumer protection in the crypto sphere. With fraud losses linked to crypto kiosks skyrocketing, regulators are stepping in to ensure operators follow compliance measures that protect users. This includes implementing solid anti-fraud policies and using blockchain analytics to identify and stop fraudulent transactions.

What Can Kiosks Do to Beef Up Security?

To win back consumer trust, crypto kiosks need to adopt an array of security measures. Here are some strategies to consider:

More Transparency and Disclosure: Operators should make it easy for users to understand the risks and terms of using crypto kiosks. Being open and clear is essential to repairing trust after enforcement actions. Anti-Fraud Policies: The proposed Crypto ATM Fraud Prevention Act of 2025 requires kiosk operators to establish strong anti-fraud policies. This includes identifying fraud risks, creating controls to manage them, and employing blockchain analytics tools to spot transactions linked to fraudulent activities. Stay Compliant: Kiosk operators need to keep abreast of regulatory developments and ensure they comply with state laws. This includes sticking to deposit limits and making operational changes to align with regulatory expectations. Educate Consumers: Teaching users about the risks tied to crypto kiosks and how to use them safely can empower them and help foster trust in these services.

What Are the Downsides of Stringent Regulations on Consumer Access?

While strict regulations are designed to protect consumers, they can also lead to some drawbacks. Here are a few potential negatives:

Less Access and Innovation : Overly strict regulations may limit the availability of crypto products and services, particularly for underserved populations who could use alternative financial services.

Regulatory Confusion : Different regulations across states can create chaos, making it tough for consumers to navigate and for providers to offer seamless services.

Higher Costs : The cost of complying with strict regulations can increase operational expenses for crypto service providers, which could be passed on to consumers through higher fees or reduced services.

Slower Adaptation: The fast-paced nature of crypto markets needs flexible regulatory frameworks. Rigid regulations could stifle innovation and leave consumers exposed to new risks without solid protections.

How Can Fintech Startups Tackle Regulatory Changes?

Fintech startups in Asia and beyond can effectively navigate the heightened regulatory scrutiny by taking several strategic steps:

Get Compliant: Startups need to stay updated on regulatory trends and implement solid KYC (Know Your Customer) and AML (Anti-Money Laundering) processes to reduce risks. Use Technology: Leveraging tech-enabled compliance solutions, like on-chain KYC and Zero-Knowledge proofs, can help startups meet regulatory requirements while maintaining user privacy. Talk to Regulators: Engaging actively with government agencies and participating in public consultations can aid startups in anticipating regulatory trends and influencing policy development. Change Business Models: Startups should focus on permissible crypto assets and prepare for licensing and registration to comply with changing regulations.

What Lies Ahead for Crypto Kiosks?

The recent crackdowns on companies like Coinme indicate a shift toward greater accountability and compliance in the crypto kiosk sector. As regulations get tighter, operators will have to adapt to maintain consumer trust and ensure their services are secure and compliant.

The future of crypto kiosks may involve a blend of innovation and regulation, with operators utilizing technology to bolster security while adhering to regulatory frameworks. By adopting solid anti-fraud measures and promoting transparency, crypto kiosks can regain consumer confidence and flourish in an ever-changing environment.

In summary, the road ahead for crypto kiosks is paved with a commitment to security, compliance, and consumer education. As the industry evolves, those who prioritize these aspects will be best positioned to thrive in the competitive and dynamic world of cryptocurrency.

Seattle-based crypto ATM operator Coinme has agreed to pay a $300,000 penalty for violating daily transaction limits for crypto ATMs in California.

California caps crypto ATM transactions at $1,000 per customer per day under a law brought in last year. The company also failed to include required disclosures on customer receipts at its kiosks located in grocery and convenience stores across California, according to California’s Department of Financial Protection and Innovation.

It marks the DFPI’s first enforcement action under the state’s Digital Financial Assets Law.

Under the consent order, Coinme has agreed to pay the penalty, including $51,700 in restitution to an elderly California resident who claimed to have been scammed.

The enforcement action should “send a strong message” to crypto kiosk operators that the state “means business when it requires digital asset companies to follow the rules that help prevent scammers from taking advantage of unsuspecting Californians,” said KC Mohseni, a DFPI commissioner.

Neil Bergquist, CEO and co-founder of Coinme, told Cointelegraph that the firm will continue expanding into California, before adding:

Coinme shares in CA DFPI’s desire to protect consumers and has deployed extensive consumer warnings to educate consumers as the adoption of digital currencies continues to grow. Coinme had measures to comply with California’s kiosk transaction limit when the law first took effect and has consistently strengthened its controls over time.

An example of a Coinme crypto kiosk, located in a food court. Source: Coinme

Crypto ATM scams rising

Scammers trick victims into purchasing crypto assets at ATMs and transferring funds directly to fraudsters’ wallets, said the DFPI.

The Digital Financial Assets Law was enacted in 2023 specifically to address these risks through kiosk operator regulations.

In April, the FBI reported that there were almost 11,000 complaints and over $246 million in losses associated with crypto ATM scams in 2024, a 31% increase from 2023. Two-thirds of scam victims were over 60 years old.

Crypto ATMs banned in Washington

Washington’s second-biggest city, Spokane, took things a step further by banning crypto ATMs last week.

Related: Crypto ATM network shrinks as US loses 1,200 machines in days

The measure was imposed to protect citizens from scams and money laundering, with local police claiming that funds deposited into crypto kiosks ended up “in places like China, North Korea, and Russia.”

Aussie ATM sting

Meanwhile, Australian federal police said on Wednesday that they had contacted more than 90 citizens as part of a crackdown on criminal use of crypto ATMs, including pig butchering victims and suspected offenders.

In Texas, a county sheriff last week took a power-cutting tool to a local crypto kiosk after a family was reportedly scammed out of $25,000.

This article has been updated to include comments from Coinme CEO Neil Bergquist.

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The California Department of Financial Protection and Innovation (DFPI) released its fourth annual report highlighting key accomplishments from 2024 pursuant to its authority under the California Consumer Financial Protection Law (CCFPL). The report describes new DFPI regulations and highlights the DFPI’s increased efforts to conduct public outreach, investigate consumer complaints and bring public enforcement actions for consumer protection violations.

The CCFPL grants the DFPI the authority to regulate providers of consumer financial products and services governed by California consumer protection laws1 and to take action against covered persons or service providers who commit unfair, deceptive, or abusive acts or practices when offering or providing consumer financial products or services.2

The DFPI has continued to expand its consumer protection efforts, particularly to fill the void as the federal government has scaled back enforcement actions and adjusts its supervisory priorities. The report notes that the DFPI remains committed to protecting against unfair, deceptive and abusive acts within the state, “regardless of federal policy changes.”

DFPI’s key accomplishments

The report highlights the DFPI’s key regulatory, enforcement and outreach accomplishments in 2024.

Rulemaking

In October 2024, the DFPI finalized regulations that require, for the first time, registration for the following four financial products and services:

Income-based advances, including earned wage advance (EWA) products Private postsecondary education financing Debt settlement services Student debt relief services

The new regulations, which took effect in February, impose registration, reporting, examination and other oversight requirements on providers of these financial products and services. The regulations also clarify that income-based advances and education financing products are loans under the California Financing Law (CFL), and that tips for these services are “charges” subject to the CFL’s rate limits.

The DFPI continued developing the infrastructure and materials needed to collect and analyze data received pursuant to regulations effective in 2023 requiring small business financing providers to submit annual reports.

Enforcement and investigations

The DFPI’s Enforcement Division remained active, opening nearly 700 CCFPL-related investigations, issuing more than 200 public CCFPL actions (a 12% increase over the prior year) and collecting $2.7 million in CCFPL penalties. These actions pursuant to the CCFPL comprised approximately one-third of the DFPI’s 2024 public enforcement activities.

The report also highlights several notable enforcement cases – including a $2.5 million consent order with a banking as a service (BaaS) provider related to customer service practices; actions against three student loan debt relief companies for practices related to charging fees and loan forgiveness; and mortgage fraud and junk fee-related settlements, one of which entailed a collaboration with the federal Consumer Financial Protection Bureau (CFPB) and 10 state attorneys general.

Consumer complaints and outreach

The DFPI received 2,388 CCFPL-related complaints, which represents 16% of all complaints received by the DFPI and a 6% increase from the CCFPL-related complaints received in 2023. The top two categories of CCFPL-related complaints involved crypto assets (42%) and debt collection (31%). The DFPI also received a high number of complaints against credit reporting agencies and student loan servicing companies.

The report also describes the DFPI’s outreach and innovation efforts, including increasing stakeholder engagement by the Office of Financial Technology Innovation, hosting community-based events to educate underserved and underbanked groups, cultivating outreach partnerships with state and federal entities, and prioritizing digital marketing and communication strategies.

Looking ahead

The DFPI notes that it will continue to implement the CCFPL through rulemaking, enforcement and complaint handling, and we expect its activity to increase given changing priorities at the federal level, including at the CFPB. We expect the 2024 enforcement trends to continue with a focus on bank partnerships, debt relief services, crypto scams, and unlicensed lending and debt collection. In addition, we expect the DFPI to increase scrutiny, and therefore enforcement, in areas where the federal government has pulled back, including peer-to-peer lending, student lending, remittances and digital payments.

Notably, the DFPI indicated that it expects to initiate formal rulemaking to require registration for additional consumer financial products and services in 2025. In October 2024, the DFPI requested public comment on additional industries that should be required to register under the CCFPL, with comments due in December 2024. We will continue to monitor California state developments and rulemakings that impact industry participants.

Notes

About the Monthly Bulletin

KC Mohseni

Commissioner, Department of Financial Protection and Innovation

The June 2025 Monthly Bulletin covers the month ended May 2025.

It is issued pursuant to Financial Code section 376.

The Monthly Bulletin is available at no charge via e-mail.

To subscribe, go to: https://public.govdelivery.com/accounts/CADFI/subscriber/new.