California’s Butte County Moves to Tighten Bitcoin ATM Regulations

Key Takeaways:

• Butte County, California, is considering local ordinances to regulate Bitcoin ATMs.
• New state legislation will treat Bitcoin ATMs like traditional banks.
• California has implemented measures to limit daily deposits and improve transparency.

Butte County in California is pushing for stricter regulations on Bitcoin ATMs. This initiative was discussed during a local government committee meeting on August 7, aligning with recent state-level legislation to curb fraudulent activities associated with these machines.

State Support Bolsters Crypto Regulatory Efforts in California

During the committee discussion, Andy Pickett, the chief administrative officer at the County of Butte, provided an update on recent state-level developments. He drew attention to a forthcoming bill, set to take effect in July 2025, which will regulate Bitcoin ATMs like traditional banks. 

JUST IN: 🇺🇸 California to regulate 2,800 #Bitcoin ATMs and treat them more like "banks". pic.twitter.com/rwn5zJA9H4

— Bitcoin Archive (@BTC_Archive) August 7, 2024

This state-level support is expected to strengthen local efforts to control these increasingly popular cryptocurrency kiosks.

“The bigger impact is a bill that will take effect in July 2025, which will regulate the use of Bitcoin ATMs, treating them more like a bank,” Pickett stated, emphasizing the significance of the upcoming changes.

The push for tighter regulations follows a disturbing investigative report by the Californian legislature in October 2023. 

The study uncovered alarming practices, including some crypto ATMs charging premiums as high as 33% and allowing transaction limits of up to $50,000. 

In response, California implemented measures to enhance consumer protection. These include capping daily deposit limits at $1,000, requiring mandatory receipts for all transactions, and mandating disclosure of operator names.

Pickett stressed the importance of local action, stating, “Each jurisdiction would need to pass their ordinance to regulate the Bitcoin machines, and any ordinance would likely be challenged in court.” 

This highlights the complex legal situation of cryptocurrency regulations at the local level.

Notably, the city of Chico, located within Butte County, has emerged as a hotspot for crypto ATMs.

With 347 active machines, Chico surpasses the total number of crypto ATMs in major economies such as Hong Kong, Spain, Poland, and New Zealand, highlighting the pressing need for effective regulations to mitigate potential risks. 

FBI Warns of Rising Bitcoin ATM Scams Amid Global Regulatory Landscape

Against this backdrop, Butte County's regulatory push takes on added urgency, driven by growing concerns about the exploitation of crypto ATMs in fraudulent schemes.

In 2022, the FBI's Miami Field Office warned about the increasing popularity of these machines among scammers, particularly in “pig butchering scams.

These schemes involve fraudsters posing as romantic interests or long-lost friends to manipulate victims into making crypto transfers.

“The use of cryptocurrency and cryptocurrency ATMs is also an emerging payment method. Individual losses related to these schemes ranged from tens of thousands to millions of dollars,” the FBI reported.

The efforts in California reflect a broader global trend towards stricter regulation of cryptocurrency transactions. 

In the United States, Bitcoin ATM operators must register with the Financial Crimes Enforcement Network (FinCEN) and comply with federal anti-money laundering (AML) and know-your-customer (KYC) regulations. 

Similar requirements exist in the European Union under the Fifth Anti-Money Laundering Directive (5AMLD).