Bitcoin ATMs Declared Illegal in UK by Financial Regulator

Bitcoin ATMs Declared Illegal in UK by Financial Regulator
File photo of a bitcoin ATM in a market stall on 10th August,
2021 in Leeds, United Kingdom. (Photo: Daniel Harvey Gonzalez/In Pictures, Getty Images)

Bitcoin and other cryptocurrency ATMs that allow people to buy and sell crypto are illegal in the UK, according to a letter made public on Friday by Britain’s Financial Conduct Authority. That means anyone currently operating a Bitcoin ATM is doing so illegally and will have to stop, according to the government regulator.

“Crypto ATMs offering cryptoasset exchange services in the UK must be registered with us and comply with UK Money Laundering Regulations,” the Financial Conduct Authority announced on its website.

“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,” the FCA continued.

It’s unclear how many bitcoin ATMs may currently be in operation throughout Britain, though the online tracker Coin ATM Tracker claims there are currently 84 in the UK. The same website lists over 34,000 crypto ATMs in the U.S. alone, by far the largest number in the world.

“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,” the FCA said in a statement.

“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,” the FCA continued.

What’s driving this latest crackdown on bitcoin in the UK? It seems to be driven by a concern over money laundering, and the fact that crypto ATMs don’t always have ways of positively identifying who’s using them.

From the Telegraph news outlet in the UK:

One Bitcoin ATM operator, Gidiplus, recently lost a judicial review attempting to overturn the FCA’s decision to refuse it a licence.

The regulator had told the company that its weaker identity checks on users depositing less than £250 meant there was a risk of “smurfing”, in which large numbers of “mules” deposit small amounts to evade detection.

Olumide Osunkoya, Gidiplus’s owner, said his machines were no longer operational. He said he had sold them to a buyer in eastern Europe, where checks are less strict, and that other operators in the UK are doing the same.

“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.