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The German Federal Financial Supervisory Authority, or BaFin, has announced new measures under the Banking Act that require licensing and permissions for the installation and operation of digital currency ATMs.

According to a notice on the regulator’s website, digital currency ATMs constitute banking business, which means they fall within their regulatory remit.

“Proprietary trading is a financial service and financial commission business is a banking business, for which prior approval from BaFin is required.”

The move comes following the decision to classify digital currencies as a type of financial instrument earlier this year. Since the definition was introduced, the regulator has taken several steps towards tightening regulation around the sector, in a bid to bring this into line with the regulation of other financial services.

BaFin has also mandated licensing for custodian services, pushing dozens of German institutions towards the licensing process in a bid to become authorized to offer digital currency custody services to their clients.

There are currently some 28 digital currency ATMs installed across the biggest cities in Germany, providing customers with the chance to buy a range of digital currencies, including BTC and ETH. However, there have been concerns raised about the use of digital currency ATMs in money laundering and other instances, leading to growing pressure for regulation of the emerging sector.

According to BaFin, those that operate digital currency ATMs without their approval are committing an offense, and are liable to prosecution: “Those who set up such crypto machines that do not have permission from BaFin are acting without permission and are thus also liable to prosecution.”

“Persons or companies who make the premises or power or internet connections available to such crypto-machine operators are involved in their unauthorized transactions and are therefore themselves possible addressees of administrative measures.”

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