UK Regulator Warns Against ‘Illegal’ Crypto Cash Machines

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Financial Conduct Authority warns cryptocurrency ATMs operating in UK are illegal and operators must shut them down or face enforcement action

The UK’s finance regulator has warned operators of cryptocurrency ATMs that the machines are operating illegally and must be shut down or face enforcement action.

Crypto ATMs allow users to purchase digital currencies using a bank card.

According to Coin ATM Radar, dozens of the machines are currently operating in the UK, in locations such as supermarkets and coffee shops.

But the Financial Conduct Authority warned that no cryptoasset firm registered with it has been authorised to offer ATM services.

Image credit: La Bitcoinera crypto
A crypto ATM from Honduras. Image credit: La Bitcoinera

Illegal ATMs

“Any of them operating in the UK are doing so illegally and consumers should not be using them,” the FCA said.

Crypto ATMs offering cryptoasset exchange services in the UK must be registered with the FCA and comply with UK money-laundering regulations (MLR), the regulator said.

“We are concerned about crypto ATM machines operating in the UK and will therefore be contacting the operators instructing that the machines be shut down or face further action,” it said.

The FCA has published a list of unregistered crypto firms that may be continuing to do business. It said since the list was first published 110 of the firms have ceased operating.

Last month the Upper Tribunal ruled against Gidiplus, a firm offering crypto ATM services, which wanted to continue trading as it appealed the FCA’s refusal of its registration under the MLRs.

Judge Timothy Herrington ruled there was a “lack of evidence” that Gidiplus would undertake its business in a “broadly compliant fashion”.

Money laundering

The FCA initially refused Gidiplus’ registration due to “particular concerns” over the firm’s “business-wide and customer risk assessments, customer due diligence, enhanced due diligence and transaction monitoring”.

It said at the time that Gidiplus co-owner Olumide Osunkoya could not demonstrate he had “adequate knowledge, skills and experience in respect of Gidiplus’ obligations under the MLRs”.

“We regularly warn consumers that cryptoassets are unregulated and high-risk which means people are very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them,” the FCA said.

While cryptocurrencies such as Bitcoin have gained popularity and some mainstream acceptance, regulators regularly warn of the dangers they pose to economies’ financial stability, while creating opportunities for money laundering.

Ukraine has raised millions in crypto-asset donations amidst the country’s war with Russia, with industry watchers noting that digital currencies are a way of quickly transferring funds across borders.