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The Financial Conduct Authority (FCA) has begun taking action against unauthorised crypto ATMs in the UK which may cause users to lose funds.
In the event of an error when using an unregistered cryptocurrency machine, there may be immense financial ramifications for users as it may result in a loss of funds. The FCA has stated that it will continue to take action against unlicensed crypto ATMs in the UK. Various locations suspected of hosting such machines have been visited and inspected by the regulator across the country. A coordinated operation between the FCA and other law enforcement agencies led to the visitations.
Using crypto ATMs, people can purchase and sell various cryptoassets with cards or cash. A traditional crypto ATM does not require a bank account to be connected to it. Instead, cryptoassets are sent or received from a person’s crypto wallet. Various cryptoasset logos may be displayed on the machines’ signage.
An FCA joint executive director, Steve Smart, commented: “ If you use a crypto ATM in the UK, you are using a machine operating illegally, and you may be handing your money over to criminals. You will not be protected if something goes wrong, and you could lose your money. It is also unlikely you will be able to contact the machine operator to resolve any problems you may have. Often, we see no effective communication channels for people to contact the operator. We will continue to warn the public and take appropriate enforcement action against unregistered crypto ATM operators.”
Despite the FCA’s regular warnings, cryptoassets remain unregulated and high-risk, so if something goes wrong, consumers are unlikely to have any protection. The FCA requires cryptoasset exchange providers to register under UK money laundering regulations.
The FCA highlighted one case in which a person contacted Citizens Advice after depositing £1,000 into a crypto ATM. When this machine was used to buy crypto, the transaction failed, but no funds were returned. To get their funds returned, the individual could not contact the machine’s operator. Those crypto ATMs have been removed from service after an inspection by the FCA.