FCA Orders Closure Of Crypto ATMs In UK

The FCA recently issued a warning against crypto ATMs operating in the United Kingdom. According to a press release, operators looking to offer crypto ATM services have to register with the FCA and comply with money laundering regulations.

At the moment, none of the registered cryptocurrency businesses in the UK have been approved to run crypto ATMs. Since 2020, the FCA has fully registered 33 crypto firms, while 21 companies are under temporary registration until March 31, 2022; however, the regulatory agency has stated that the operation of crypto ATMs is illegal and has warned the general public against using such machines. An excerpt from the warning reads:

"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 press release referred to a court ruling against Gidiplus Limited, a company offering cryptocurrency ATM services. On November 15, 2021, the regulator issued a Decision Notice to Gidiplus, rejecting the firm's application to operate as a registered crypto-asset exchange provider.

According to the agency, Gidiplus' application was rejected because the company did not meet the requirements as stipulated in money laundering regulations. The UK regulatory watchdog stated that Gidiplus failed to enact robust customer identification protocols for users making payments below 250 British pounds (about $330) thus opening the door to potential smurfing by rogue actors.

Smurfing refers to making several small payments to evade money laundering detection. This technique is often associated with money launderers who use the method to hide illicit cash flows.

Later in December, the company appealed the FCA's decision at the Upper Tribunal, which was, however, unsuccessful. The judge said that there was a "lack of evidence as to how Gidiplus would undertake its business in a broadly compliant fashion."

The shutdown notice served to crypto ATM operators in the UK is the latest example of the FCA’s tightening cryptocurrency controls in the country. Since assuming oversight of virtual currency policing in the UK, the FCA has enacted several policies intended to establish a strict legal framework for conducting crypto-related business in the UK.

Following the notice, the eight crypto ATM operators in the UK will have to shut down their machines in the country. In total, the UK is home to 81 crypto ATMs with the majority of them located in London. Other cities like Birmingham, Oxford, and Manchester also play host to a small number of crypto cash machines.

Apart from its crypto registration regime, the FCA is also actively investigating several virtual asset service providers in the UK. According to the regulator, over 300 such investigations have been launched in the last year.