PSA – Crypto Bitcoin ATM Kiosks California – Mandatory DFPI filing

By | December 11, 2023
Crypto kiosks

Mandatory DFPI filing beginning Jan. 1, 2024 for Digital Financial Asset Transaction Kiosk Operators

Effective January 1, 2024, Senate Bill 401 (Chapter 871, Statutes of 2023), (“SB 401” which, alongside AB 39, constitutes the “Digital Financial Assets Law”) requires a digital financial asset transaction kiosk operator (“kiosk operator”) to provide the Department of Financial Protection and Innovation (“Department”) with a list of all locations of kiosks that the operator owns, operates, or manages in California. The Digital Financial Assets Law also requires a kiosk operator to submit updates to the Department within 30 days of any changes, and places additional obligations for kiosk operators.

For more information on the law and information on how to submit the kiosk location list, please visit our website: https://dfpi.ca.gov/dfal-kiosk/.

Questions?
Contact the Department at [email protected].

Background

Digital Financial Assets Law: Information for Kiosk Operators
The Digital Financial Assets Law requires a digital financial asset transaction kiosk operator (“kiosk operator”) to comply with certain requirements that go into effect on January 1, 2024, January 1, 2025, and July 1, 2025.

Effective January 1, 2024
Effective January 1, 2024, the Digital Financial Assets Law requires a kiosk operator to: (1) provide a list of its kiosk locations to the Department of Financial Protection and Innovation (Department), (2) comply with daily transaction limits, and (3) provide receipts to customers with specified information for any transaction made at the operator’s kiosks.

Kiosk Locations
Effective January 1, 2024, the Digital Financial Assets Law requires a kiosk operator to provide the Department with a list of all locations of kiosks that the operator owns, operates, or manages in this state. The law also requires a kiosk operator to submit updates to the Department within 30 days of any changes to kiosk locations. Fin. Code, § 3906.

Who must report a list of kiosk locations?
Anyone who owns, operates, or manages a digital financial asset transaction kiosk in this state must report kiosk locations to the Department. A digital financial asset transaction kiosk (“kiosk”) is defined as an electronic information processing device that is capable of accepting or dispensing cash in exchange for a digital financial asset.

When must a kiosk operator submit its list of kiosk location(s)?
The law requiring a kiosk operator to report its kiosk locations to the Department becomes operative on January 1, 2024. The Department requests kiosk operators submit a list of kiosks to the Department no later than March 15, 2024.

How does a kiosk operator submit its kiosk locations to the Department?
A kiosk operator can submit its kiosk location information to the Department by completing this Excel template with all kiosk locations and submitting it via the Department’s upload site.

The Excel file must contain the following horizontal fields, in the order specified below, for each location:

Name of kiosk operator (legal name)
Name of the location (if inside a retailer, indicate the name of the retailer in the location name)
Street Address
Suite or Unit, if applicable
City
Zip Code
Identify whether the kiosk operator is an owner, operator, or manager
Identify whether the location is being reported for the first time as “Add,” or whether the location is being removed as “Remove”
How does a kiosk operator report a change in kiosk location to the Department?
All updates to a kiosk operator’s list of kiosks must be filed with the Department within 30 days of any changes. A kiosk operator seeking to add a new location should use the Excel Template and update the eighth field. Submit “Add” if the location is being added for the first time and submit “Remove” if the location is being removed from the list, and then submit the document via the Department’s upload site.

Daily Transaction Limits
Effective January 1, 2024, a kiosk operator is prohibited from accepting or dispensing more than $1,000 in a day from or to a customer via a kiosk. Fin. Code, § 3902.

Receipts
Effective January 1, 2024, a kiosk operator must provide a customer a receipt that includes the following information for any transaction made at its kiosk:

The name of the customer
The date and time of the transaction
The name of the kiosk operator
The amount of a digital financial asset involved in the transaction
The amount of U.S. dollars involved in the transaction
The amount, in U.S. dollars, of any fees collected by the kiosk operator related to the transaction
The amount, in U.S. dollars, of any spread between the U.S. dollar price of the digital financial asset that is charged to the customer and the U.S. dollar price of the digital asset as listed by a licensed digital financial asset exchange
The name of the licensed digital asset exchange the kiosk operator used to calculate the referenced spread
Fin. Code, § 3905(b).

Obligations of kiosk operators not engaged in digital financial asset business activity
If a kiosk operator is not engaged in digital financial asset business activity but allows or facilitates another person to engage in such activity via a kiosk that it owns, operates, or manages, the kiosk operator must still comply with all the provisions of Financial Code sections 3901 through 3907. Fin. Code, § 3907(b)(3).

Effective January 1, 2025
On January 1, 2025, the Digital Financial Assets Law requires a kiosk operator to: (a) limit the charges that may be collected from a customer, and (b) provide written disclosures to a customer prior to completing a transaction.

Charges
As of January 1, 2025, a kiosk operator may not collect direct or indirect charges from a customer related to a single digital financial asset transaction that exceeds the greater of the following:

$5, or
15% of the US dollar equivalent of digital financial assets involved in the transaction.
Fin. Code, § 3904.

Obligations of kiosk operators not engaged in digital financial asset business activity
If a kiosk operator is not engaged in digital financial asset business activity but allows or facilitates another person to engage in such activity via a kiosk that it owns, operates, or manages, the kiosk operator must ensure that person complies with the limits on charges effective January 1, 2025. Fin. Code, § 3907(b)(2). The kiosk operator must also continue to comply with all other provisions of Financial Code sections 3901 through 3907. Fin. Code, § 3907(b)(3).

Written Disclosures
As of January 1, 2025, prior to a transaction, a kiosk operator must provide a written disclosure in English and the same language principally used by the operator to advertise, solicit, or negotiate with a customer, as specified, that includes the following minimum information:

The amount of the digital financial asset involved in the transaction
The amount, in US dollars, of any fees, expenses, and charges collected by the operator
The U.S. dollar price of the digital financial asset that is charged to the customer and the U.S. dollar price of the digital financial asset as listed by a licensed digital financial asset exchange
If a method is not provided to reverse or refund a transaction, a warning that all transactions are final and cannot be undone
The disclosure must be clear and conspicuous and provided separately from any other disclosure provided by the kiosk operator. Fin. Code, § 3905(a).

Effective July 1, 2025
Licensing
On or after July 1, 2025, if a kiosk operator is engaged in digital financial asset business activity, the kiosk operator must be licensed in accordance with the Digital Financial Assets Law. Fin. Code, § 3907(a).

Obligations of kiosk operators not engaged in digital financial asset business activity
If a kiosk operator is not engaged in digital financial asset business activity but allows or facilitates another person to engage in such activity via a kiosk that it owns, operates, or manages, the kiosk operator must ensure that person is appropriately licensed under the Digital Financial Assets Law by July 1, 2025. Fin. Code, § 3907(b)(1). The kiosk operator must also continue to comply with all other provisions of Financial Code sections 3901 through 3907. Fin. Code, § 3907(b)(3).

Questions?
Contact the DFPI at [email protected].

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Author: Staff Writer

Craig Keefner is the editor for Kiosk Industry (Self Service Kiosk Machine). Opinions and point of view here on kioskindustry is not necessarily the stance of the Kiosk Association or kma.global -- With over 40 years in the industry and experience in large and small kiosk solutions, Craig is widely considered to be an expert in the field. Major kiosk projects for him include Verizon Bill Pay kiosk and hundreds of others.