The FCA has issued warnings against crypto ATM operators to shut down operations or risk facing enforcement action.
This is the latest in a series of enforcement actions against crypto firms. The majority so far related to Advertising Standards Authority enforcement action in respect of cryptoasset advertising. The FCA’s message to crypto ATM operators, however, signals further regulatory scrutiny over cryptoasset service providers.
As crypto ATMs offer cryptoasset exchange services, they have been required to register with the FCA since January 2020 for anti-money laundering purposes. To date, only a small number of firms have successfully registered with the FCA; none on the basis of offering crypto ATM services. This effectively means that providing these services in the UK is unlawful.
The FCA also highlights the recent Upper Tribunal decision against Gidiplus. This firm wanted to continue trading, pending the Upper Tribunal’s determination of its appeal against the FCA refusing its application for registration under the money laundering regulations. It was concluded in the case that there was a ‘lack of evidence as to how Gidiplus would undertake its business in a broadly compliant fashion’.
The FCA will now be contacting operators of crypto ATMs and instructing them to shut down their operations or face further action.
Separately, since publishing its list of unregistered crypto firms, the FCA has found that 110 of them are no longer operational. The FCA also reiterates (again) that, given the unregulated and high-risk nature of cryptoassets, people should be prepared to lose all their money if they choose to invest in them.
With further regulation of cryptoassets in the pipeline, it is unsurprising that we are seeing ongoing active steps towards regulatory oversight and enforcement in this area. Cryptoasset service providers be warned.