The cryptocurrency Automated Teller Machine (ATM) space is growing at an impressive pace, with thousands of devices manufactured and installed yearly. However, their propensity to facilitate possible cybercrime has led to countries’ financial regulators turning their attention to the tools.
No More Leeway
The latest country to be doing so is Germany, as the Federal Financial Supervisory Authority (BaFin) has now mandated that any company looking to install Bitcoin ATMs will need to seek approval from it first.
According to a press release published earlier this week, BaFin explained that ATM operators would need to seek approval to operate in Germany, following the German Banking Act’s precepts. The agency already classified cryptocurrencies as financial instruments earlier this year, and this move marks yet another regulatory control measure that it would be taking in the space.
“Proprietary trading is a financial service and financial commission business is a banking business, for which prior approval from BaFin is required,” read a translated version of the press release.
Besides the licensing requirement for Bitcoin ATMs, the agency has also mandated licensing requirements for crypto-asset custodians that want to operate in Germany. It appears that BaFin is moving quickly to ensure a regulated cryptocurrency industry across the board.
BaFin’s require+ment is coming after the agency has had to shut down several ATM manufacturers. In March, the agency ordered KKT UG, one of the country’s largest Bitcoin ATM operators, to close its business, per a statement.
On its website, KKT UG advertises 24 Bitcoin machines für cryptocurrency purchases and sales in Germany. However, the firm also has reaches that extend to the rest of Europe. According to BaFin, Adam Gramowski, the company’s managing director, was conducting commercial proprietary trading via the company. Under the German Banking Act, he needs a license to do so.
Despite the order, KKT UG continued to operate in the country. According to a report from CoinDesk, BaFin issued a second order to the company last month. This time, however, it took action and seized the company’s ATMs altogether.
Global Regulations Tightening for Bitcoin ATMs
BaFin has been outlining the need for ATM operators to register for a while. If they don’t listen, many will go the way of KKT UG eventually. This week’s press release appears to be more of a vindication in case the agency takes similar action against other companies.
The regulator’s action also underscores what appears to be continued global crackdowns on cryptocurrency ATMs. In Canada, amendments to Proceeds of Crime (Money Laundering) and Terrorist Financing Act now recognize crypto companies as Money Service Businesses.
Francis Pouliot, the chief executive of local crypto exchange BullBitcoin, explained on Twitter that the new legislation would primarily affect companies that swap crypto for cash. He named Bitcoin ATM operators as the most affected, as they would not have to report all transactions worth CAD 10,000 or more.
John Jeffries, the CTO of industry analysis firm CipherTrace, also told Law360 that Bitcoin ATMs would become a “greater point of regulatory focus” in the future. As he explained, governments will need uniform regulatory enforcement and compliance going forward. So, tighter laws over ATMs and their operations are expected.