The UK’s Financial Conduct Authority (FCA), working alongside West Yorkshire Police’s Digital Intelligence Unit, has raided several properties in Leeds suspected of hosting illegal cryptocurrency automatic teller machines (ATMs).
The joint action, using powers granted by the Money Laundering Regulations 2017, came after a lengthy evidence-gathering exercise.
Like their legitimate counterparts, a familiar feature outside banks for more than 50 years, crypto ATMs are standalone digital units that enable users to buy and sell cryptocurrency assets by paying in cash or using a debit card, which they then deposit in the user’s crypto wallet.
Although there are many thousands of them around the world – the majority in the US – their use in the UK is unsanctioned and, since no crypto ATM operators are registered with the FCA, illegal. The FCA has previously told crypto ATM operators working in the UK that their activities are illegal and ordered their shutdown.
“Unregistered Crypto ATMs operating in the UK are doing so illegally [and] we will continue to identify and disrupt unregistered crypto businesses operating in the UK,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
“Crypto businesses operating in the UK need to be registered with the FCA for anti-money laundering purposes. However, crypto products themselves are currently unregulated and high risk, and you should be prepared to lose all your money if you invest in them.”
Detective sergeant Lindsey Brants of the Force Cyber Team at West Yorkshire Police added: “Having conducted intelligence gathering work across West Yorkshire, we soon established the locations of several live crypto ATMs.
“Warning letters were issued requesting the operators cease and desist using the machines and that any breach of regulations would result in an investigation under money-laundering regulations. We then shared our findings with the Financial Conduct Authority,” said Brants.
“We are pleased to be able to work in partnership with the FCA in what we believe is a national first here in West Yorkshire.”
The FCA said it was now reviewing evidence gathered during the raids and will consider potential action against the operators of the unsanctioned units. It is also working with other law enforcement agencies around the UK to disrupt and disable any remaining crypto ATMs.
The regulator reiterated that there are no legally operated crypto ATMs in the UK, and that cryptocurrencies and related assets are currently not regulated and as such carry a very high degree of risk.
Additionally, crypto investors who get caught up in a scam such as a rug-pull or similar cannot expect any formal redress.
Meanwhile, the UK Treasury is pressing ahead with plans to launch its own digital currency, which could ultimately lead to a government-backed digital pound that is already being dubbed Britcoin.
Earlier in February, it opened a four-month consultation on the subject, and it is seeking a head of central bank digital currency to manage the project.
The Treasury argues that a digital currency backed by a central bank such as the Bank of England will retain its value, unlike unregulated cryptocurrencies, and replicate the use of cash, while conforming to the highest standards of data protection and privacy.
“A digital pound issued and backed by the Bank of England could be a new way to pay that is trusted, accessible and easy to use. That is why we want to investigate what is possible first, whilst always making sure we protect financial stability,” said chancellor of the exchequer Jeremy Hunt.