Bitcoin ATMs are set to vanish in the U.K. after the Financial Conduct Authority told operators to "shut their machines down or face enforcement action."
Although not technically illegal, the regulator says machines that allow crypto to be bought and sold need to be registered with the FCA — and comply with the country's money laundering regulations.
However, the FCA claims that no crypto firms have been given approval to operate a Bitcoin ATM so far — "meaning that any of them operating in the U.K. are doing so illegally and consumers should not be using them."
Figures from Coin ATM Radar suggest that about 80 machines are based in the U.K. and Ireland — but it is worth noting that the 40 found in the Republic of Ireland won't be affected by this ruling.
Many of them are found in supermarkets and convenience stores.
The FCA's concerns lie in how crypto ATMs have few background checks, which potentially mean that the machines could be used to launder illicit cash. By contrast, crypto exchanges usually perform detailed Know Your Customer checks to verify the identities of each account owner.
Crypto ATM operators who fail to comply with the FCA's order could be prohibited from operating in the financial space — and could also face fines or criminal prosecution.
According to The Daily Telegraph, two companies that owned Bitcoin ATMs have now confirmed that their machines have been taken out of business — with one entrepreneur now selling his machines to a buyer in eastern Europe.
The digital assets industry has been touted as an opportunity for the City of London to gain a competitive edge after Brexit, but some have accused the FCA of being too heavy-handed in its stance toward digital assets. The regulator has repeatedly warned that cryptoassets are "unregulated and high-risk" — and investors "should be prepared to lose all their money if they choose to invest."
Also speaking to The Telegraph, Blockchain.com's chief executive Peter Smith had warned the watchdog is stymying the industry's progress — and warned the U.K. has "fallen behind" over the past two to three years as other economies start to embrace digital assets.
Despite the FCA's warnings, figures suggest that more than 2.3 million people in the U.K. own cryptocurrency.