On March 11, the United Kingdom’s chief financial regulator issued a warning to crypto ATM operators, advising them to shut down or face enforcement action. According to the watchdog, all crypto ATMs must comply with money laundering legislation and register with the agency. However, since none of the companies currently running crypto ATMs in the country have done so, the FCA has issued a shutdown order.
The FCA claims that the crypto ATMs do not comply with money-laundering standards in the United Kingdom. Financial institutions across the world are obligated to follow so-called “know your customer” regulations, which require service providers to identify consumers. However, because of the way crypto ATMs operate, it is impossible for their operators to identify their consumers and comply with these requirements.
According to the FCA, none of the firms that operate these cash machines are legally permitted to do so. In fact, based on the data, obtaining regulatory permission from the UK’s financial watchdog seems to be easier said than done. According to statistics published by the agency, as of March 11, just 33 crypto asset businesses were fully registered with the FCA.
An additional 21 crypto asset companies have been provisionally registered, which means the agency has not declared them “as fit and appropriate” but has not yet refused their application. According to the FCA’s list of unregistered crypto asset enterprises, over 244 have had their applications rejected. The FCA has denied around seven applications for each recognised business.
What are Crypto ATMs?
Crypto ATMs are devices that enable customers to exchange cryptocurrency for cash and vice versa with minimum security checks. Unlike traditional cash ATMs, which need credit or debit cards and hence record users’ personally identifying information, crypto ATMs do not gather such information, allowing them to be used to acquire or sell cryptocurrency secretly. They commonly offer Bitcoin.