UK Financial Regulator Warns Against Illegal Use of Cryptocurrency ATMs
The Financial Conduct Authority (FCA) in the UK has issued a warning to consumers, advising them not to use cryptocurrency ATMs that are operating illegally in the country. According to the FCA, any machines offering crypto-asset exchange services in the UK must be registered and comply with UK Money Laundering Regulations (MLRs).
The FCA stated, "None of the crypto-asset 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." The regulator expressed concerns about the presence of crypto ATM machines in the UK and announced plans to contact operators instructing them to shut down the machines or face further action.
Currently, the FCA has a list of over 240 crypto-asset firms on its site, none of which are registered with the regulator. Out of these, 110 are no longer operational, leaving around 130 that may be conducting business illegally.
In a recent ruling by the UK court, the Upper Tribunal, Gidiplus, a crypto firm, appealed against the FCA’s decision to deny its registration under the MLRs. The judge concluded that there was a "lack of evidence as to how Gidiplus would undertake its business in a broadly compliant fashion."
The FCA emphasized the high risks associated with investing in crypto-assets, highlighting that they are unregulated and consumers are unlikely to have any protection if things go wrong. Individuals should be prepared to lose all their money if they choose to invest in cryptocurrencies.
Amidst a broader crackdown on cryptocurrency providers due to Western sanctions impacting Russia and Belarus, the FCA reminded financial institutions and registered crypto-asset firms of their obligations to prevent customers from circumventing the sanctions. The regulator released a list of screening controls and red flag indicators for firms to adhere to.
Recently, President Biden signed an executive order aimed at enhancing consumer protection and reducing national security risks linked to cryptocurrency. This underscores the growing importance of regulatory measures in the cryptocurrency space to safeguard consumers and uphold financial integrity.