September 9, 2020 | AtoZ Markets – The Federal Financial Supervisory Authority (BaFin) has published clear conditions for crypto automated teller machines (ATM) operators. In a new statement, BaFin draws attention to crypto ATMs and warns that unlicensed operation is illegal.
All entities that operate these vending machines trade financial commissions. As a result, they must obtain approval from BaFin pursuant to § 32 (1) KWG.
Related article: BaFin Shuts Down Illegal Bitcoin ATMs in Germany
Setting up crypto ATMs in Germany without Bafin's authorization is illegal
The regulatory also stated:
"Those who have set up such crypto machines, which do not have a permit from BaFin, act illegally and are therefore also subject to criminal prosecution under § 54 (1) no. 2 KWG."
The warnings do not only concern the operators themselves but also the owners of the premises where the crypto ATMs are located. Landlords should therefore always make sure that the operator has obtained a BaFin license, as business registration alone is not enough.
BaFin classifies digital assets
In March, BaFin issued a guidance in which clarified the status of digital assets. According to the regulator's definition, cryptocurrencies and other digital assets are "financial instruments."
The definition of digital currencies is consistent with the definitions of other regulators. This includes the Financial Action Task Force on Money Laundering (FATF). In August, Hong Kong police arrested three suspects who are allegedly got unauthorized access to access Bitcoin ATMs.
Having taken advantage of the so-called "loopholes" in the ATM, the bad actors managed to withdraw approximately $30,000 in 11 transactions without authorizations from six separate bitcoin ATMs.
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