Chapter 9Digital Financial Asset Transaction Kiosks

Section § 3901

Explanation

This section defines key terms related to digital financial assets in California.

It explains that 'charges' include either customer fees/expenses or the difference in market price for digital assets. A 'digital financial asset transaction kiosk' is a machine that takes or gives cash for digital assets, with 'cash' meaning U.S. coins and bills. A 'licensed digital financial asset exchange' is a legal trading platform with a license from California or New York. Lastly, an 'operator' is someone who owns or runs one of these kiosks in California.

For purposes of this division:
(a)CA Financial Code § 3901(a) “Charges” means either of the following:
(1)CA Financial Code § 3901(a)(1) Fees or expenses paid by the customer.
(2)CA Financial Code § 3901(a)(2) The difference between the current market price of the digital financial asset on a licensed digital financial asset exchange and the price of the digital financial asset charged to the customer.
(b)Copy CA Financial Code § 3901(b)
(1)Copy CA Financial Code § 3901(b)(1) “Digital financial asset transaction kiosk” means an electronic information processing device that is capable of accepting or dispensing cash in exchange for a digital financial asset.
(2)CA Financial Code § 3901(b)(2) As used in this subdivision, “cash” means physical United States currency, both coins and paper currency.
(c)CA Financial Code § 3901(c) “Licensed digital financial asset exchange” means a digital financial asset exchange that is not an operator and has either of the following:
(1)CA Financial Code § 3901(c)(1) A license to conduct virtual currency business activity in this state or the State of New York pursuant to Part 200 of Title 23 of the New York Codes, Rules and Regulations.
(2)CA Financial Code § 3901(c)(2) A license pursuant to this division.
(d)CA Financial Code § 3901(d) “Operator” means a person who owns, operates, or manages a digital financial asset transaction kiosk located in this state.
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(Added by Stats. 2023, Ch. 871, Sec. 1. (SB 401) Effective January 1, 2024.)

Section § 3902

Explanation

This rule limits the amount of money that can be accepted or given out to a customer at a digital financial asset transaction kiosk to $1,000 per day. Basically, you can't put in or take out more than $1,000 from these machines in a single day.

An operator shall not accept or dispense more than one thousand dollars ($1,000) in a day from or to a customer via a digital financial asset transaction kiosk.
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(Added by Stats. 2023, Ch. 871, Sec. 1. (SB 401) Effective January 1, 2024.)

Section § 3904

Explanation

Starting January 1, 2025, businesses cannot charge customers more than the greater of either $5 or 15% of the digital asset's value when making a single transaction with digital financial assets. The 15% is calculated based on the digital asset's market price on a licensed exchange when the transaction starts.

On or after January 1, 2025, an operator shall not collect charges, whether direct or indirect, from a customer related to a single digital financial asset transaction that exceed the greater of the following:
(a)CA Financial Code § 3904(a) Five dollars ($5).
(b)CA Financial Code § 3904(b) Fifteen percent of the United States dollar equivalent of digital financial assets involved in the transaction according to the publicly quoted market price of the digital asset on a licensed digital financial asset exchange at the time the customer initiates the transaction.
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(Added by Stats. 2023, Ch. 871, Sec. 1. (SB 401) Effective January 1, 2024.)

Section § 3905

Explanation

Starting January 1, 2025, operators of digital financial transactions must give customers a written disclosure before transactions. This disclosure must be in English and the main language used to communicate with customers, containing information like the digital asset amount, fees, and market prices. It should also warn if transactions can't be reversed.

After a transaction, operators must provide a receipt detailing customer and transaction information. This includes personal and transaction details, costs involved, and any price spreads noted with references to the digital asset exchange used.

(a)Copy CA Financial Code § 3905(a)
(1)Copy CA Financial Code § 3905(a)(1) On or after January 1, 2025, before a digital financial asset transaction, an operator shall provide a written disclosure in English and in the same language principally used by the operator to advertise, solicit, or negotiate with a customer containing the terms and conditions of the transaction, which shall include, at a minimum, all of the following:
(A)CA Financial Code § 3905(a)(1)(A) The amount of a digital financial asset involved in the transaction.
(B)CA Financial Code § 3905(a)(1)(B) The amount, in United States dollars, of any fees, expenses, and charges collected by the operator.
(C)CA Financial Code § 3905(a)(1)(C) The United States dollar price of the digital financial asset that is charged to the customer and the United States dollar price of the digital financial asset as listed by a licensed digital financial asset exchange.
(D)CA Financial Code § 3905(a)(1)(D) If an operator does not provide a method to reverse or refund a transaction, a warning that all transactions are final and cannot be undone.
(2)CA Financial Code § 3905(a)(2) The disclosure required by this subdivision shall be clear and conspicuous and provided separately from any other disclosure provided by the operator.
(b)CA Financial Code § 3905(b) An operator shall provide a customer with a receipt for any transaction made at the operator’s digital financial asset transaction kiosk that includes all of the following information:
(1)CA Financial Code § 3905(b)(1) The name of the customer.
(2)CA Financial Code § 3905(b)(2) The date and time of the transaction.
(3)CA Financial Code § 3905(b)(3) The name of the operator.
(4)CA Financial Code § 3905(b)(4) The amount of a digital financial asset involved in the transaction.
(5)CA Financial Code § 3905(b)(5) The amount of United States dollars involved in the transaction.
(6)CA Financial Code § 3905(b)(6) The amount, in United States dollars, of any fees collected by the operator in relation to the transaction.
(7)CA Financial Code § 3905(b)(7) The amount, in United States dollars, of any spread between the United States dollar price of the digital financial asset that is charged to the customer and the United States dollar price of the digital financial asset as listed by a licensed digital financial asset exchange.
(8)CA Financial Code § 3905(b)(8) The name of the licensed digital financial asset exchange the operator used to calculate the spread described in paragraph (7).
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(Added by Stats. 2023, Ch. 871, Sec. 1. (SB 401) Effective January 1, 2024.)

Section § 3906

Explanation

If you run digital financial asset transaction kiosks in California, you must provide a list of their locations to the state department. If there are any changes to these locations, you need to update the list within 30 days. The state department will then make this list publicly available on its website.

(a)CA Financial Code § 3906(a) An operator shall provide to the department a list of all locations of digital financial asset transaction kiosks that the operator owns, operates, or manages in this state.
(b)CA Financial Code § 3906(b) An operator shall provide the department with updates to the list required by this section within 30 days of any changes.
(c)CA Financial Code § 3906(c) The department shall make the list required by this section for each operator available to the public on the department’s internet website.
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(Added by Stats. 2023, Ch. 871, Sec. 1. (SB 401) Effective January 1, 2024.)

Section § 3907

Explanation

Starting July 1, 2026, anyone operating in digital financial asset business activities must follow specific regulations. If an operator doesn't directly engage in these activities but allows others to use their kiosks for such transactions, they must ensure the users are licensed, adhere to charge limits, and comply with all relevant rules.

(a)CA Financial Code § 3907(a) On or after July 1, 2026, an operator shall comply with Section 3201 to the extent that the operator engages in digital financial asset business activity.
(b)CA Financial Code § 3907(b) If an operator does not engage in digital financial asset business activity but allows or facilitates another person to engage in digital financial asset business activity via a digital financial asset transaction kiosk that is owned, operated, or managed by the operator, the operator shall do all of the following:
(1)CA Financial Code § 3907(b)(1) On or after July 1, 2026, ensure that the person engaging in digital financial asset business activity via the digital financial asset transaction kiosk has a license pursuant to this division.
(2)CA Financial Code § 3907(b)(2) Ensure that any charges collected from a customer, whether collected by the operator, a person engaging in digital financial asset business activity via the digital financial asset transaction kiosk, or both, comply with the limits provided by Section 3904.
(3)CA Financial Code § 3907(b)(3) Comply with all other provisions of this chapter.
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(Amended by Stats. 2024, Ch. 945, Sec. 6. (AB 1934) Effective January 1, 2025.)