Cryptocoin ATMs ruled illegal – “Shut down at once”, says regulator

Security

Ever wanted or needed to buy or sell cryptocoins on a whim, without going online?

Ever felt like cashing in 100,000 Satoshis or so at 3am to treat your party buddies to a kebab-fest on the way home from a big night out?

Well, if you live in the UK, you can’t easily do any of those things any more.

Last Friday, the UK’s FCA, short for Financial Conduct Authority, published an official bulletin entitled: Warning on illegal crypto ATMs operating in the UK.

You might think that would leave a bunch of legal ATMs online, but the FCA says that there are, in fact, no correctly registered cryptocurrency ATMs anywhere in the country, and thus that they must all shut down at once, or else:

Crypto ATMs offering cryptoasset exchange services in the UK must be registered with [the FCA] and comply with UK Money Laundering Regulations (MLR). None of the cryptoasset firms registered with us have been approved to offer crypto ATM services, meaning that any of them operating in the UK are doing so illegally and consumers should not be using them.

“Unregulated and high-risk”

It’s not clear whether the primary concern of the FCA is specifially that unscrupulous operators could make it easy for criminals to cash out significant cryptocurrency payments untraceably.

After all, if you’re buying or selling cryptocoins via an existing payment card account or mobile phone payment system, from an ATM in a shopping centre, you’d think that the operation would be at least as trackable as any transaction involving a non-cryptocurrency account, such as a big-money purchase in a department store or luxury brand shop.

The FCA does, however, seem concerned that these devices could make it easier for vulnerable individuals to get suckered into cryptocurrency scams, by lowering the barrier of entry to acquiring cryptocoins in the first place:

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.

Since we published the list of unregistered crypto firms that may have been continuing to conduct business, a recent assessment found that 110 are no longer operational.

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.

Whereas online cryptocoin exchanges can demand some sort of document-based signup process, such as requiring new purchasers to upload scans of personal identification first (we’re not going to discuss the pros and cons of that approach here, merely to mention it), it’s hard to see how a cryptocoin ATM conveniently placed in a local shopping centre could usefully conduct much of a “know your customer” process up front.

The cryptocoin ATM could snap a photo of you in front of the machine, of course, and no doubt does so for its own sake anyway, but rules are rules, and regulations are regulations, and whatever hoops a registered ATM operator in the UK needs to jump through to ensure they are licensed correctly…

…it seems that no one has yet jumped those hoops correctly.

According to the BBC, there were fewer than 100 cryptcoin ATMs operating in Britain last week anyway, but we’re guessing that the number is zero now.

Here’s the closest device to Sophos HQ that we’re aware of (we made a quick trip to check its status during our lunchbreak); you can see that this one is still powered up, but dutifully spurning customers:


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