On June 25, 2025, the California Department of Financial Protection and Innovation (DFPI) took its first enforcement action under the Digital Financial Assets Law (DFAL). This action was a Consent Order against Coinme, Inc., a Seattle-based operator of cryptocurrency kiosks (Bitcoin ATMs) in California.
This action signals increased regulatory scrutiny of crypto financial services. It reinforces the DFPI’s commitment to consumer protection within the digital asset ecosystem.
Legal Foundation and Findings
The DFPI brought this action under the Digital Financial Assets Law (DFAL). It also brought the action under the California Consumer Financial Protection Law (CCFPL). Coinme was found to have violated several provisions of DFAL and engaged in unlawful business practices under CCFPL, including:
- Conducting digital asset transactions that exceeded the $1,000 per person per day limit established under DFAL;
- Failing to include required information on transaction receipts. Specifically, this information includes the name of the exchange used to determine asset pricing and the spread.
These actions constituted violations of state law designed to promote transparency and safeguard consumers engaging with digital financial services.
Summary of Order Terms
Desist and Refrain Requirements
Coinme must immediately:
- Cease accepting digital asset transactions that exceed $1,000 per customer per day;
- Update transaction receipts to include the identity of the exchange used to determine asset pricing.
Restitution and Penalties
- Restitution: Coinme is required to pay $51,700 in restitution to California consumers affected by its violations.
- Administrative Penalty: The DFPI imposed a $300,000 civil monetary penalty, with credit given for the restitution already paid. The remainder is payable in three installments within 30, 60, and 90 days of the Order.
Compliance Monitoring
Coinme must submit written compliance updates to DFPI every 60 days. This is required for one year or until it stops operating kiosks in California, whichever occurs first.
Waiver of Rights
Coinme waived its right to a hearing, reconsideration, and judicial review, consenting to the Order’s terms without contest.
Why This Matters
First Use of DFAL Enforcement Authority
This marks the first enforcement action under California’s DFAL. The law was enacted to regulate digital asset activities. This includes the growing number of unlicensed or under-regulated cryptocurrency ATMs operating in vulnerable communities.
Consumer Protection Emphasis
The case highlights increasing state-level focus on crypto-related consumer risks. There is particular concern about scams targeting older adults through deceptive or opaque kiosk transactions. The DFPI has prioritized enforcement against platforms that fail to disclose key transaction details.
Operational Compliance Precedent
This Order establishes a framework. Other crypto kiosk operators must now treat it as a baseline for legal compliance in California. It also suggests that more enforcement actions might occur. This may happen if companies do not align their systems and disclosures with DFAL requirements.
Compliance Recommendations
For digital asset businesses operating in California or other jurisdictions with active consumer protection frameworks, this action offers several key takeaways:
- Ensure strict adherence to transaction caps, particularly when operating in physical environments like kiosks or ATMs;
- Review all consumer receipts and interfaces to confirm compliance with disclosure requirements;
- Audit relationships with third-party exchanges and ensure pricing and spread information is clearly attributed;
- Develop a compliance reporting framework that can withstand regulator scrutiny.
Conclusion
Staying informed and compliant in this evolving landscape is more critical than ever. Whether you are an investor, entrepreneur, or business involved in cryptocurrency, our team is here. We provide the legal counsel needed to navigate these exciting developments. If you believe we can assist, schedule a consultation here.