The Financial Conduct Authority has issued a warning about unregistered operators of crypto ATMs and the potential impact of their use on consumers. In broad terms a cryptoasset ATM allows a person to buy cryptoassets such as Bitcoin and other cryptocurrencies, using cash or other payment methods. Some ATMs are bi-directional and allow users to sell cryptoassets too. In essence, the ATMs offer crypto investment opportunities to the 'person on the street', potentially trivialising investment in what the FCA considers to be a high-risk asset class.

Firms carrying out certain kinds of activity in relation to cryptoassets are currently required to register with the FCA and comply with applicable money laundering legislation (Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 or MLR). The FCA has identified (see here) that a number of firms operating cryptoasset ATMs and/or performing a wider set of activities in this space are not registered but should be, either because they are yet to submit an application or have applied for registration but cannot meet the MLR requirements.

It has long been an accepted feature that many cryptoassets and related activities fall outside the scope of the UK financial services regulatory regime. However it is fair to say that the direction of travel is firmly towards more regulation in this space rather than less, and the FCA's warning can be viewed in this context. Watch this space in 2022 as the UK government prepares to strengthen the rules on misleading cryptoasset adverts by widening the scope of the existing financial promotions regime (see here).