Germany’s Financial Watchdog Cracks Down on Unlicensed Bitcoin ATMs

Key Takeaways

• German financial regulator BaFin carried out nationwide raids on illegally operating Bitcoin ATMs on Aug. 20.
• The German agencies seized 13 illegal ATMs and a quarter of a million euros in cash from these exchange machines.
• Bafin warned the public to be wary of illegal Bitcoin ATMs, which might have been set up with criminal intent.

On Aug. 20, German financial watchdog, the Federal Financial Supervisory Authority (BaFin),  in collaboration with local police, the Deutsche Bundesbank, and the Federal Criminal Police Office (BKA), seized several unauthorized Bitcoin ATMs and confiscated a considerable amount in cash from these machines.

The regulatory body has issued a stern warning to the public, urging them to exercise caution when dealing with illegal Bitcoin ATMs, which may be established with malicious intentions.

BaFin Seizes 13 Illegal ATMs

BaFin released a detailed statement outlining the results of its nationwide operation against illegal Bitcoin ATMs. The law enforcement agencies conducted raids at 35 locations involving 60 government officials and seized 13 illegally operating Bitcoin ATMs.

In addition to the seized ATMs, the German authorities confiscated a quarter of a million euros ($278,000) from the 13 illegal Bitcoin ATMs.

A BaFin spokesperson revealed to CCN that the German regulator utilized a broad range of sources in preparation for the enforcement action.

“Special software, the Internet, but also information from other authorities or other references help in the search.”

The illegal Bitcoin exchange machines posed significant money laundering risks. Under German financial law, illegal ATM operators may face up to five years in prison.

In its public notice, the financial regulator warned that some of these Bitcoin exchange machines might have criminal intent behind their setup. BaFin urged the general public to be cautious of such Bitcoin-focused ATMs and to conduct thorough research before using them.

An excerpt from the BaFin press release read:

“Anyone who accepts large amounts of cash of more than 10,000 euros must establish the customer’s identity to prevent money laundering (‘know your customer’ procedure, KYC ).”

In Germany, exchanging cryptocurrencies for Euros and vice versa constitutes commercial proprietary trading or banking. Thus, Bitcoin ATM operators must obtain a license from BaFin under the country’s Banking Act.

The financial regulator told CCN that ATM operators must submit a license application to BaFin per Section 32 of the German Banking Act.

“BaFin examines the application and if all the requirements specified in the law (see Section 32 KWG) are met, the license is granted.”

Germany’s Bitcoin ATM footprint

Bitcoin ATMs became popular in the early days of crypto when crypto exchanges were not readily available to everyone.

As a result, several crypto companies installed physical exchange machines in various locations worldwide, allowing crypto enthusiasts to buy Bitcoin and other crypto assets in exchange for cash.

According to CoinATM Radar data , there are more than 38,000 Bitcoin ATMs installed worldwide, most of them in the United States, and that number is growing every day.

The U.S. is leading the Bitcoin ATM chart with over 32,221 installed ATMs nationwide, followed by Canada with 3,067 and Australia with 1,156 machines.

Source: Bitcoin ATMs by continent. Coin ATM Radar

Germany currently ranks seventh, with only 176 Bitcoin ATMs installed nationwide. The lower number of Bitcoin ATMs reflects two key factors: lesser demand and a stricter regulatory policy.

About the Author

Prashant Jha

Prashant Jha is a crypto-journalist focused on the US and UK markets, his interests lie in blockchain technology and crypto adoption across emerging economies.

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