Shut down or face action: UK FCA issues warning vs digital asset ATMs

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Digital asset ATM operators in the United Kingdom must shut down immediately or face regulatory action, the country’s financial watchdog has warned. 

In its warning, the Financial Conduct Authority (FCA) said that ATM operators must be registered with the watchdog and comply with the U.K. Money Laundering Regulations (MLR). 

“None of the cryptoasset firms registered with us have been approved to offer crypto ATM services, meaning that any of them operating in the U.K. are doing so illegally and consumers should not be using them,” it said.

The FCA is concerned about digital asset ATMs operating in the country and will contact the operators and instruct that the machines must be shut down or they stand to face further action, it said.

“We regularly warn consumers that cryptoassets are unregulated and high-risk which means people are very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them,” the watchdog added.

According to Coin ATM Radar’s data, there are eight companies operating ATMs in the U.K., with a combined 81 machines in the country. 

In a precedent-setting instance, one ATM operator in the U.K. lost a case in which it was challenging the FCA for the right to continue operating its machines in the country. Gidiplus wanted to continue trading pending the determination of its appeal against the FCA for refusing its application for registration under the MLR guidelines.

However, Judge Timothy Herrington of the Upper Tribunal ruled against Gidiplus, declaring there was a lack of evidence of how the company would undertake its business in a compliant fashion.

The FCA had declined the application by Gidiplus, claiming that the firm didn’t meet the requirements of MLRs. It noted that it had particular concern “in respect of Gidiplus’ business-wide and customer risk assessments, customer due diligence, enhanced due diligence and transaction monitoring.”

The FCA also claimed that the firm’s co-founder Olumide Osunkoya couldn’t demonstrate that he possessed “adequate knowledge, skills and experience in respect of Gidiplus’ obligations under the MLRs.”

This is the latest in a string of measures by the FCA targeting the digital currency industry as it seeks to stamp out fraud and protect investors. As CoinGeek reported, the watchdog opened investigations against 300 digital asset firms and stopped 1 in 4 firms from joining the market in 2021.

Watch: CoinGeek New York presentation, FYI: Better Information Tools for a More Lawful Blockchain Industry