The Financial Conduct Authority in the U.K. banned the purchase and trading of crypto in the U.K. through a letter released to the public on 10th March 2022. All Bitcoin ATM operations are therefore considered illegal. A new regulatory regime for cryptocurrency was announced along with the ban, which was not taken well by the crypto community and other people concerned.
Why the U.K. Banned Crypto ATMs
The FCA stated that none of the crypto-asset firms registered with them is allowed to give crypto ATM services; hence if any of them go on with their operations will be doing so illegally, and consumers should not use their services. They said that they disapprove of crypto ATMs, and their operators would be reached to close the machines or deal with the legal consequences. Over 240 crypto-asset organizations have been traced on the FCA’s website all of which aren’t registered. However, one hundred ten of these firms are said to have no more extended function, leaving 130 firms left doing business illegally.
Money holders can be used to withdraw cash from ATMs and exchange it for bitcoins. Because of the private nature of money transactions, these machines may be used to launder cryptocurrency thanks to the confidential nature of money dealings.
Bitcoin blockchain offers an exit from the openly noticeable bitcoin link, which aids in tracing illegal dealings. The Online ATM Detector reports that there are only 80 bitcoin ATMs in action in the United Kingdom, compared to the more than 32,000 ATMs in the United States. The origin of the ATMs in Canada, where there are nearly 2,300 ATMs.
Registration Issues with U.K. ATMs
FCA states that all cryptocurrency ATMs in the U.K. must be registered and abide by the U.K. money laundering regulations. They have also claimed that the machines’ background checks are insufficient for small deposits.
Concerns have constantly come up that these machines may be used for money laundering. The FCA, however, has regularly warned clients about the high risk and irregularities of Crypto assets.
Matching with Global Trends
Many International governments are out to regulate crypto transactions with penalties and sanctions. Some are worried that Russia may start using cryptocurrency to circumvent Western trade restrictions after being removed from the financial telecommunication network Society for Worldwide Interbank Financial Telecommunications.
It is, however, not a good solution for criminals. Crypto transactions are mostly pseudonymous, but governments can get to them by connecting to a blockchain address that will lead them to a specific individual’s identity.
Chainalysis, an American blockchain analysis company, found that the percentage of criminal crypto transactions is depleting over time. A similar organization has also been put in place recently to help track the money of sanctioned individuals, making cryptocurrency more open.
U.K. Crypto Regulation
The announcement on crypto regulation came just before the ban on crypto ATMs. Britain plans on becoming a global hub for crypto-asset technology and investment by identifying stable coins as a legal form of payment.
The FCA organized a crypto sprint, an engagement group, and a National Futures Trust to work more diligently with the industry. The other regulations include:
- A financial market infrastructure sandbox that helps the industry to innovate and experiment.
- Working with the crypto-asset sector by launching a crypto-asset Engagement Group
- Looking for ways to make the U.K. tax system competitive to help develop the crypto-asset sector
- Work with Royal Mint on a non-fungible Token
Why the ATM Ban Sends a Bad Message
Crypto ATMs signify progress and integration, and banning them sends a negative message to the crypto community and investors.
Assuming that crypto ATMs are a way for criminals to launder money and deal with illegal business is the opposite of the way and mission of cryptocurrency.
You can find other means of dealing with criminals without banning Crypto ATMs.
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