On May 18, the DFPI announced a settlement agreement with a crypto kiosk operator requiring the company to cease operating all of its digital financial asset kiosks in California by May 20, 2026. According to the DFPI, the company allegedly violated the California Digital Financial Assets Law, the California Consumer Financial Protection Law, and federal anti-money laundering laws. The company reportedly operated 42 Bitcoin ATMs across Southern California.
According to the settlement agreement, the DFPI alleged that the company engaged in multiple violations involving transaction limits, fees, disclosures, receipts, and anti-money laundering compliance. Specifically, the DFPI alleged that the company:
- Exceeded transaction limits. The company allegedly accepted more than $1,000 in cash from customers in a single day through its kiosks, exceeding the transaction cap imposed under the DFAL.
- Charged unlawful fees and failed to provide required disclosures. According to the DFPI, the company processed more than 3,000 transactions that allegedly included fees exceeding DFAL limits and failed to provide required pre-transaction disclosures concerning fees, pricing, and transaction finality.
- Failed to issue compliant receipts. The DFPI alleged that the company issued more than 14,000 receipts that omitted required information, including customer names and the digital asset exchange used to calculate transaction spreads.
- Maintained an ineffective BSA/AML compliance program. According to the DFPI, the company allegedly failed to collect or verify customer identification information in thousands of transactions despite maintaining internal customer identification procedures.
Under the settlement agreement, the company agreed to cease all digital financial asset business activity in California unless it obtains a DFPI license in the future. The agreement also includes a suspended $9.9 million administrative penalty that becomes payable if the company fails to comply with the settlement terms.
Putting It Into Practice: Recent months have seen a wave of state legislative and enforcement activity targeting virtual currency kiosks (previously discussed here, here, and here). Businesses operating digital financial asset kiosks or related crypto payment services should review transaction limits, fee structures, disclosure practices, and compliance controls to ensure alignment with evolving state requirements.