The Financial Conduct Authority (FCA) in the UK has issued a warning to consumers regarding the use of cryptocurrency ATMs 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). It has come to light that none of the crypto-asset firms registered with the FCA have been approved to offer crypto ATM services, making the operation of such machines illegal. The FCA has stated that consumers should refrain from using these illegal crypto ATMs and has plans to contact the operators to shut down the machines or face further action.
Currently, there are over 240 crypto-asset firms listed on the FCA’s website, none of which are registered with the regulator. Out of these, 110 are no longer operational, leaving around 130 firms that may be conducting business illegally. A recent ruling by the UK court, the Upper Tribunal, went against a firm called Gidiplus, which had appealed against the FCA’s decision to deny its registration under the MLRs. The judge found a “lack of evidence as to how Gidiplus would undertake its business in a broadly compliant fashion.”
The FCA has been vocal about the risks associated with crypto-assets, warning consumers that they are unregulated and high-risk investments. This means that individuals are unlikely to have any protection if things go wrong, and they should be prepared to lose all their money if they choose to invest in cryptocurrencies.
In light of the recent crackdown on cryptocurrency providers due to Western sanctions impacting Russia and Belarus, the FCA has reminded financial institutions and registered crypto-asset firms of their obligations to prevent customers from circumventing sanctions. A list of screening controls and red flag indicators has been released to aid in compliance with these regulations.
Recently, President Biden signed an executive order aimed at enhancing consumer protection and reducing national security risks associated with cryptocurrency. This signals a growing focus on regulating the cryptocurrency industry to protect consumers and prevent illicit activities.