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U.K. targets illegal crypto ATMs as the digital pound receives new pushback
(Kitco News) The Financial Conduct Authority (FCA), the U.K.’s financial regulator, has announced that it has begun taking action against unregistered crypto automated teller machines (ATMs) nearly a year after it first warned that all such machines operating in the U.K. were doing so illegally.
Working in conjunction with the digital intelligence and investigation unit of the West Yorkshire Police, the FCA has taken action against several sites in and around the city of Leeds that are suspected of hosting unregistered ATMs.
“Unregistered Crypto ATMs operating in the UK are doing so illegally,” said Mark Steward, executive director of enforcement and market oversight at the FCA. “We will continue to identify and disrupt unregistered crypto businesses operating in the UK. 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.”
As part of the operation, the Force Cyber Team at West Yorkshire Police conducted intelligence gathering across West Yorkshire to determine locations where crypto ATMs were in use. Once they were located, the team issued warning letters requesting that the operators cease and desist from using the machines, according to Detective Sergeant Lindsey Brants. They were also warned that “any breach of regulations would result in an investigation under money-laundering regulations.”
U.K. money laundering regulations require that all cryptoasset exchange providers in the country – which includes crypto ATM operators – must be registered with the FCA and comply with the established regulations. Currently, no crypto ATM operators have an FCA registration.
The FCA is now looking to take a more active role in disrupting and disabling illegal crypto ATMs in the country and is working with multiple law enforcement partners, including local police forces, to shut down the illegal operations. The regulator is currently in the process of reviewing all evidence gathered during the police visitations and is considering further potential enforcement actions.
Data provided by Coin ATM Radar shows that there are at least 28 locations that host Bitcoin ATMs in the U.K., with the majority located in London, along with additional locations near Nottingham, Manchester and Birmingham.
Pushback against the creation of a digital pound
The U.K.’s newly-formed Tax Reform Council is wasting no time making its presence felt as it has launched a campaign against the Bank of England’s plan to introduce a digital pound, warning that such a move could seriously harm individual privacy and lead to intrusive changes to the taxation system.
According to a report from Cointelegraph, the council believes that implementing a central bank digital currency (CBDC) would lead to increased government surveillance, a heightened risk of cyber attacks on Britain’s monetary system, and more intrusion by tax authorities into citizens' lives.
Members of the council’s advisory board – which includes economists John Chown, Patrick Minford, and Julian Jessop – have stated that “the decision of the Bank of England to pursue a British CBDC raises a number of very real concerns.” The group now looks to raise awareness of the “increased government surveillance” that CBDCs may entail.
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The creation of a digital pound has been the subject of intense focus in the U.K. for some time now the government attempts to establish a working framework for dealing with cryptocurrencies while also trying not to stifle development.
The biggest cause of concern for the Tax Reform Council is privacy, as the council says that every personal transaction made using a CBDC would be recorded on the Bank of England's private blockchain ledger, giving tax authorities unprecedented access to individuals' financial history.
Last week, the Bank of England released a consultation paper that outlines the goals of its digital pound project and included the idea of creating a “new form of digital money for use by households and businesses for their everyday payments needs.”
Based on the design outlined in the paper, the central bank would be the sole issuer of a digital pound, which would be accessible to individuals and businesses via smartphones or cards. Wallets would be anonymized on the central bank's ledger to address privacy concerns and the digital currency would be non-programmable, meaning authorities can't control how people spend their money.
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