A California regulator has permanently banned a crypto ATM operator for thousands of compliance failures, signaling a widening crackdown on the sector.
Back
California shuts down 42 crypto ATMs after 14,000 violations
California regulators have ordered Hermes Bitcoin to shut down its 42 digital asset kiosks and permanently cease operations in the state, following a settlement over more than 14,000 documented violations of state financial laws since January 1, 2024.
"The company engaged in multiple violations involving transaction limits, fees, disclosures, receipts, and anti-money laundering compliance," the Department of Financial Protection and Innovation (DFPI) said in its settlement agreement announced May 18.
The settlement details over 3,000 transactions with fees exceeding the state's legal cap and 14,120 instances of improper receipts. Hermes also allegedly accepted more than the $1,000 daily limit per customer and failed to collect required identification information, according to the DFPI.
The action against Hermes, which must shutter all kiosks by May 20, 2026, exemplifies a tougher regulatory stance on crypto ATMs nationwide, following a similar statewide ban in Minnesota and the recent bankruptcy of major operator Bitcoin Depot.
California's Broad Crypto Kiosk Crackdown
The enforcement action stems from California’s Digital Financial Assets Law (DFAL), which established a formal oversight framework for digital asset kiosk operators. The law mandates licensing, caps fees at the greater of $5 or 15% of the transaction, and limits transactions to $1,000 per person per day.
According to the DFPI, the operator, Anh Management, LLC, doing business as Hermes Bitcoin, systematically violated these rules. The settlement includes a suspended $9.9 million administrative penalty, which becomes payable if the company fails to comply with the shutdown terms. This action follows earlier desist-and-refrain orders issued against Hermes and an associated entity in late 2025 for similar compliance failures.
A National Trend of Scrutiny
The move in California is not an isolated event. It reflects a growing trend of state-level actions to rein in the crypto kiosk industry, which has faced criticism for facilitating scams and operating in regulatory gray areas.
In a parallel development, Minnesota enacted a law effective August 1, 2026, that bans crypto ATMs across the state. This move was part of a broader financial bill aimed at empowering local banks to offer crypto custody services, creating a clear regulatory divergence between institution-led crypto services and standalone kiosks. The state's push came as one of the largest Bitcoin ATM providers, Bitcoin Depot, filed for bankruptcy amid mounting legal and regulatory challenges.
For crypto kiosk operators, the Hermes Bitcoin case serves as a stark warning. The accumulation of over 14,000 disclosure violations and thousands of non-compliant transactions suggests a fundamental failure to implement or adhere to required compliance systems, a lapse that regulators are no longer willing to tolerate.
This article is for informational purposes only and does not constitute investment advice.
[1] California regulators shut down Hermes Bitcoin ATMs over 14,000 violations[2] Why Minnesota is empowering local banks to fight Wall Street for crypto revenue[3] DFPI Orders Crypto Kiosk Operator to Shut Down California Operations Over Alleged DFAL Violations[4] Atlanta area firm with the most bitcoin ATMs in North America to shut down
