The Financial Conduct Authority (FCA) has warned operators of cryptocurrency ATMs in the UK to shut down their machines or else face enforcement action. In its announcement, the financial watchdog said that it hasn’t granted any of the crypto firms registered with it the permission to operate ATM services. That means all crypto ATMs in the UK are illegal.
“Crypto ATMs offering cryptoasset exchange services in the UK must be registered with us and comply with UK Money Laundering Regulations,” the regulator wrote. As The Telegraph reports, there are around 81 functional crypto ATMs in Britain based on data from the Coin ATM Radar tracker, located mostly inside supermarkets and convenience stores.
These ATMs allow users to deposit cash in exchange for cryptocurrency, which they can then transfer to their digital wallets. The regulator previously raised concerns that the machines could be used for money laundering, because they require minimal background checks, especially for small deposits.
Gidiplus, a Bitcoin ATM operator, tried to overturn the FCA’s refusal to grant it a license. The regulator argued that bad actors could take advantage of its machines’ weak identity checks on people depositing less than £250. Money launderers and illegal businesses could potentially use multiple “mules” to do small transactions in order to avoid getting noticed by authorities. The UK’s Upper Tribunal ruled against Gidiplus, which has since sold its ATMs to an Eastern European buyer.
The regulator ended its announcement with a warning that cryptocurrency is high-risk and that people could lost their money if something goes wrong:
“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.”