Regulatory Compliance & Growth in the U.S.A & Abroad
DARA
Digital Asset Regulatory Authority
A Self Regulated Organization
Presented By:
DARA U.S & DARA International
Blockchain Legal Institute Foundation
Digital Asset & Tech News From Around The USA
- Follow DARA on LinkedIn for News Posts
- Federal & State Updates
- CLE classes & Conference Update
- Next Steps
Introductions of Those Attending
The meeting opens with introductions from Attorney General office representatives and task force members joining the call.
TRM & ChainAbuse
Chainabuse is TRM Labs’ public, crowdsourced platform for reporting and tracking crypto scams, phishing sites, and fraudulent services.
Victim and investigator reports are centralized, enriched with blockchain intelligence, and made searchable so that law enforcement and industry can quickly spot patterns, link related cases, and prevent repeat victimization.
Chainabuse also supports investigations in practice by turning individual reports into actionable intelligence that accelerates case building and cross-agency collaboration.
Trends Across the USA
Crypto and Bitcoin ATM Machines
Because cryptocurrency and Bitcoin ATMs (often called BTMs) allow cash-to-crypto transactions, they have drawn increasing scrutiny from lawmakers worried about consumer fraud, elder abuse, and money laundering. The regulatory landscape is highly fragmented. There is no single federal law governing BTMs; instead, regulation occurs primarily at the state level.
How Many States Have Crypto ATM Laws?
Nearly all 50 states have laws that indirectly apply to cryptocurrency ATMs, usually by wrapping them under existing Money Transmitter Laws. If an operator wants to place a BTM in a state, they are typically required to obtain a Money Transmitter License (MTL).
However, only a handful of states (roughly 5 to 10) have enacted or explicitly introduced bespoke, BTM-specific statutes that target the physical machines themselves, imposing strict fee caps, daily transaction limits, and mandatory operational guidelines.
How State Laws Are Similar
Across the board, state regulations share the same foundational goal: preventing financial crimes and protecting everyday consumers from predatory practices.
- Money Service Business (MSB) Alignment: Almost every state treats a BTM operator as an intermediary similar to traditional money transmission services. To operate legally, companies must register, undergo background checks, and maintain minimum net worth requirements.
- Anti-Money Laundering (AML) Compliance: States generally defer to federal Bank Secrecy Act (BSA) guidelines. Operators must implement Know Your Customer (KYC) protocols, meaning the machines must actively verify user identities (often via phone numbers, ID scanners, or facial recognition cameras) to prevent illicit cash structuring.
- Basic Disclosures: Most states require BTMs to display clear terms of service, warning users that cryptocurrency transactions are irreversible and that digital assets are not insured by the FDIC.
How State Laws Are Different
The starkest differences appear when comparing states that rely on broad financial regulations versus states that have written hyper-specific laws targeting crypto ATMs.
1. Dedicated Licensing vs. Blanket Rules
- New York: Leads with the strictest framework. Instead of standard money transmitter rules, entities dealing in virtual currency must secure the highly rigorous and expensive BitLicense.
- California: Enacted the Digital Financial Assets Law, which creates a specialized regulatory framework specifically defining how crypto asset businesses must be licensed and operated.
Fee Caps and Transaction Limits
The cost of using a BTM can be incredibly high, with total fees frequently averaging 15% to 20% of the transaction value. States differ heavily on how they handle this:
- California (Strict Limits): California law caps total BTM transaction fees at $5 or 15% (whichever is greater). Furthermore, it imposes a strict $1,000 daily transaction limit per customer to curb fraud and heavy financial losses.
- Other States (Free Market): The vast majority of states do not cap transaction fees or mandate daily limits, requiring only that the operator clearly disclose the fees on the screen before the user confirms the transaction.
“Cooling-Off” Periods for New Users
To combat the rising tide of scam artists coaching victims (particularly the elderly) to withdraw cash and deposit it into a BTM, some states are implementing operational delays.
- The Proactive Approach: Certain states have debated or passed measures enforcing a “cooling-off” period. For example, a machine might hold a first-time user’s transaction for 24 to 48 hours, or send automated warnings to the user’s phone if the machine detects patterns common to phishing and imposter scams.
- The Standard Approach: Most states allow instantaneous, real-time transfers without mandated operational delays.
Standard vs. Strict State Approaches
| Regulatory Feature | Standard State Approach (e.g., Texas, Pennsylvania) | Strict/Specific State Approach (e.g., California, New York) |
|---|---|---|
| Licensing Required | Standard Money Transmitter License (MTL) | Specialized Framework (BitLicense / DFAL) |
| Transaction Fee Limits | None (Disclosures only) | Capped (e.g., California’s 15% / $5 cap) |
| Daily Cash Limits | Determined by operator AML policy | Statutorily mandated (e.g., $1,000/day) |
| Fraud Delays | Instantaneous transactions | Mandatory warnings or potential transfer holds |
Additional Resources
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