Sunday, October 2

Bitcoin ATM Operators Establish Partnership to Counter Money Laundering



The major Bitcoin (BTC) ATM operators in the United States are joining forces to combat illicit activity related to Bitcoin ATMs.

Bitcoin ATM operators DigitalMint and Coinsource have launched the Cryptocurrency Compliance Cooperative (CCC), a new association that aims to establish compliance standards for the Bitcoin ATM industry.

The new compliance effort has thrown out supported by leading blockchain analytics firms such as Chainalysis and Elliptic among its initial 15 members. The CCC is now encouraging the participation of cash-based cryptocurrency services companies, regulators, financial institutions, as well as non-state and law enforcement agencies.

The association specifically targets Bitcoin ATMs to ensure Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance, as these types of ATMs are often associated with a lack of requirements for KYC. “Unfortunately, many BTM operators feel that simply asking for a cell phone number is enough due diligence to absolve them of their mandatory KYC requirements,” said Coinsource chief compliance officer Bo Oney.

“Such lax provisions provide a safe haven for bad actors to abuse machines for nefarious purposes. The CCC seeks to enforce regulatory requirements for the benefit of all BTM users and operators. This will require the participation of the most knowledgeable in the industry, all with the goal of making the cash-to-crypto space as secure as possible for consumers, ”he added.

Seth Sattler, Chief Compliance Officer at DigitalMint and a senior contributor to CCC, said illicit use cases related to the Bitcoin ATM industry are well documented by various law enforcement agencies, including fraud, abuse of the elderly and drug and human trafficking.

Related: Global crypto ATM installations have increased by 70% in 2021

“While a small number of Bitcoin ATM operators go further with KYC and AML protocols, others in the cash-to-crypto industry simply turn a blind eye and indulge in these bad actors simply by applying minimal protections for the customer, which in many cases allow completely anonymous transactions, ”said Sattler.

Similar to a traditional ATM, a Bitcoin ATM or a BTM, it is a kiosk that allows users to buy or sell Bitcoin and other cryptocurrencies through the use of cash or debit card. According to data from the BTM tracking website How many Bitcoin ATMs, there are currently more than 42,000 BTM in the United States.

In February, the New Jersey State Commission of Inquiry discovered that 75% of BTM operators in the state allowed certain transactions without requiring the customer to provide information outside of a cell phone number. Last year, an executive at blockchain analytics firm CipherTrace predicted that Bitcoin ATMs would face stricter regulations around the world, and countries like Canada and Germany are already moving to strengthen necessary AML regulations.