Bitcoin ATMs forced to shutdown in the UK

[OmegaStarScream]

So apparently[1] all the remaining Bitcoin ATMs[2] in the UK must shut down because they're not licensed, and don't comply with the AML regulations. I'm not sure what does that mean exactly, but I'm assuming it's because most of these ATMs don't require identity verification unless you're buying/selling large amounts?

Luckily, the UK doesn't have many ATMs compared to the U.S and Canada, so this is not going to impact a lot of people. What are your thoughts on this?
 
[1] https://www.thenationalnews.com/business/cryptocurrencies/2022/03/11/uk-orders-shutdown-of-illegal-bitcoin-cashpoints/
[2] https://coinatmradar.com/country/225/bitcoin-atm-united-kingdom/

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[NeuroticFish]

It may be the KYC, but my guess that's also about not paying the taxes (or not in full).
As I wrote in WO too, most probably the operators will need a bit of time to get fully legal and then re-deploy the machines, maybe with more KYC enforcement rules, maybe with higher fees too.

[OmegaStarScream]

-snip-
most probably the operators will need a bit of time to get fully legal and then re-deploy the machines, maybe with more KYC enforcement rules, maybe with higher fees too.

That's the thing though the fees are already high as they are right now, increasing them would not attract more users, especially if they're going to enforce KYC. Why would anyone (aside from tourists maybe) use them anymore when exchanges are offering way lower fees.

[Rikafip]

I'm not sure what does that mean exactly, but I'm assuming it's because most of these ATMs don't require identity verification unless you're buying/selling large amounts?

One of the problems might also be the fact that they are not registered at FCA to offer ATM services

None of the crypto-asset 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.

What are your thoughts on this?

I am no surprised that goverment agencies are getting stricter when it comes to ATMs and any other way that enables you to cash out without doing KYC. In my country BTCATM I use occasionally doesn't ask for KYC no matter the amount you are taking out and I know its just a matter of time when they change that here as well.

Then again, if you remove the advantage of not having to do KYC while keeping high fees (which ATMs usually have) they might become completely obsolete.

[NeuroticFish]

That's the thing though the fees are already high as they are right now, increasing them would not attract more users, especially if they're going to enforce KYC. Why would anyone (aside from tourists maybe) use them anymore when exchanges are offering way lower fees.

This indeed a very good point. Under a certain amount the KYC may still not be necessary (and where some will pay an even higher premium for their privacy), these machines may indeed get to the point they'll have no "customers".
I fear that it will need a certain threshold to be met (meaning under a certain number of monthly customers) to see those operators consider lowering their margins and maybe optimize their cash flow too so the user doesn't pay so much extra. Time will tell...

[Mbitr]

I’ve used various atms from 2017 - 2019 around the UK - never had any KYC. A few atms wanted some KYC details for over £500 , but you could do multiple transactions up to £500. BUT, the fees were crazy - minimum 7.5%.
I always wondered when regulation would come and so it appears it’s arrived !

[DdmrDdmr]

I’m not acquainted with the regulations that apply there to Bitcoin ATMs, but it seems that they need to abide by what’s stated here:
https://www.fca.org.uk/firms/financial-crime/cryptoassets-aml-ctf-regime

According to the above link, crypto ATMs are considered as a Cryptoasset Exchange Provider, and must comply with MLR (Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations ) since 2020, but also registered with the FCA by 31/03/2022, after an extension to the registration period (thus the notifications now I presume).

The above link encloses other links to lengthy regulation factors (too lengthy for me to go over properly now), but just to point one out I found interesting:

CDD measures must also be applied to occasional transactions (single or linked) of EUR 15,000
or more. However, this threshold does not apply to cryptoasset exchange providers in as far as
they are operating an ATM, in which case CDD measures must be applied to all transactions.

Extract from page 260 of https://secureservercdn.net/160.153.138.163/a3a.8f7.myftpupload.com/wp-content/uploads/2020/07/JMLSG-Guidance_Part-II_-July-2020.pdf
CDD is customer due diligence.

[Kakmakr]

Hopefully they will be able to open up again if they are licensed .... 

This is just a money making stunt to milk more money out of the private companies that are offering them. We saw what happened in New York with the Bit License, when the people who introduced it.... made it so complex that you needed consultants to be able to license it.

Guess who quit their jobs and started working as consultants to get paid to help with these BitLicenses ..... yea you guessed it...   ==>  Benjamin Lawsky  ( Superintendent of Financial Services for the New York State Department of Financial Services (NYSDFS) 

Source : https://en.wikipedia.org/wiki/BitLicense

[tranthidung]

Sounds bad for now but I think in future, ATM owners will find ways to bind themselves with regulations.

Although, it is not the end of either Bitcoin or Bitcoin ATMs, I see a good lesson from it and hope others will see it as well as agree with me. Bitcoin is a peer-to-peer electronic cash and it works on a decentralized network. So, why do we need a physical machine, location to exchange Bitcoin. It breaks the core idea behind Bitcoin network.

[noorman0]

It's even weirder when the first ATMs were installed in London around mid-2014, does that mean they've been installed without a license since then? Compared to my country where bitcoin was only legalized as a commodity asset in 2019 iirc, it actually made regulations from the beginning regarding the installation of bitcoin ATMs which has also been around for the first time since 2014.

[masterrex]

Well if that was the requirements of the Government regulators then I believe everyone should have followed it to remain legal because in reality there's nothing we can do about it they must comply to stay operational and legitimate. Anyway, I think there's no reason to be alarmed about it because it's just a simple Government law enforcement and anyone can buy and use Bitcoin without ATM'so just relax.

[fiulpro]

Fact is, most of the ATM's around the world might be owned by individuals and not companies which does mean that they do not really have a good profit margin, comparing to the laws, the requirements I do think it's hard for them to keep up with everything. More or so the licence can be a bit too costly for these companies who just have a few customers in a while making it more difficult for them to keep with with the requirements and also pay the fee for the licence.

I do think that the government is making these requirements even more hard for individuals on purpose so that at the end of the day the whole thing would be controlled by companies extracting profits from such network.

[jackg]

That's the thing though the fees are already high as they are right now, increasing them would not attract more users, especially if they're going to enforce KYC. Why would anyone (aside from tourists maybe) use them anymore when exchanges are offering way lower fees.

This indeed a very good point. Under a certain amount the KYC may still not be necessary (and where some will pay an even higher premium for their privacy), these machines may indeed get to the point they'll have no "customers".

I didn't think they had many customers anyway. A lot of the bitcoin atms in the UK are just randomly sat in shops in city centres so they probably have low overheads and I'd also probably consider a bitcoin atm to be more of a toy.


That being said, I'm pretty sure currency converters still exist where you can put up to $10000/€10000 into a machine and it'll spit out gbp for you - without kyc and those are normally in supermarkets.

[pawanjain]

So apparently[1] all the remaining Bitcoin ATMs[2] in the UK must shut down because they're not licensed, and don't comply with the AML regulations. I'm not sure what does that mean exactly, but I'm assuming it's because most of these ATMs don't require identity verification unless you're buying/selling large amounts?

Luckily, the UK doesn't have many ATMs compared to the U.S and Canada, so this is not going to impact a lot of people. What are your thoughts on this?
 
[1] https://www.thenationalnews.com/business/cryptocurrencies/2022/03/11/uk-orders-shutdown-of-illegal-bitcoin-cashpoints/
[2] https://coinatmradar.com/country/225/bitcoin-atm-united-kingdom/

I think it is because the bitcoin ATMs would not have been registered with FCA (Financial Conduct Authority) of UK.
If they had been registered with them then they would have been under the radar of MLR (Money Laundering Regulations).
In that case they would have been allowed to keep their businesses running.

As per the AML (Anti-Money Laundering) regime of UK

Since 10 January 2020, existing businesses (operating immediately before 10 January 2020) carrying on cryptoasset activity in the UK have needed to be compliant with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended (MLRs) including the requirement to be registered with the FCA by 9 January 2021 in order to continue to carry on business. 

Reference: https://www.fca.org.uk/firms/financial-crime/cryptoassets-aml-ctf-regime

[PX-Z]

Why would anyone (aside from tourists maybe) use them anymore when exchanges are offering way lower fees.

More like because people can buy or sell using their cash? I cannot think other than good reasons for that though.

That being said, I'm pretty sure currency converters still exist where you can put up to $10000/€10000 into a machine and it'll spit out gbp for you - without kyc and those are normally in supermarkets.

Maybe because it is called "Bitcoin ATM" and knowing the characteristics of bitcoin so "KYC" is a requirement, but I don't think how KYC will work in bitcoin ATMs though.

[qwertyup23]

I’ve used various atms from 2017 - 2019 around the UK - never had any KYC. A few atms wanted some KYC details for over £500 , but you could do multiple transactions up to £500. BUT, the fees were crazy - minimum 7.5%.
I always wondered when regulation would come and so it appears it’s arrived !

Interesting, I think the shutdown was due to the fact that the fees were unregulated to the point that it has unbridled discretion as to the amount being paid? Not complete sure but all we can do is speculate. Since it has been proven that no KYC function was needed, I think I am leaning towards the regulation of the fees not being faithful to the statutes of UK.

Though I think it is also due to the fact that it may not be licensed perse or it did not comply with the regulations provided by law?

[kryptqnick]

I’ve used various atms from 2017 - 2019 around the UK - never had any KYC. A few atms wanted some KYC details for over £500 , but you could do multiple transactions up to £500. BUT, the fees were crazy - minimum 7.5%.
I always wondered when regulation would come and so it appears it’s arrived !

High fees of Bitcoin ATMs seem to be a common issue, and that's why I've never used a Bitcoin ATM. But asking for KYC for over £500 sounds like a pretty strict but somewhat fair requirement already (similar limitations are set for fiat currency exchanges in some countries, that's why I think it's somewhat fair to impose the same on Bitcoin)... Perhaps it's a temporary measure, to close ATMs, work out the regulations, enforce them and allow reopening those ATMs that comply. As others mentioned, apart from the KYC, there could be a problem of owner evading from paying taxes.

[Mbitr]

Though I think it is also due to the fact that it may not be licensed perse or it did not comply with the regulations provided by law?

I think ?? These atms sort of fell through “gaps” in the regulations and/or were so new that there weren’t any regulations that specifically covered them. Now perhaps the authorities have plugged these gaps and now ‘can’  be regulated ?? This is a bit of speculation!

[Vaskiy]

Through this kinda service there is increased fee as well as this might've been used for tax evasion. If it comply with the proper AML process surely each and every transaction will be taxed. With USA and Canada for any volume of buying the user needs to verify his identity. With that it is risky for money laundering and to escape tax.

[crwth]

I think the government is just up to the point that they want to control everything that could cause the economy, whether it's scamming or money laundering. If they don't have any percent or tax being contributed by the owner of the ATMs, then they would just remove it.

Is there any legal bitcoin ATM there at all?