Australia’s financial watchdog may gain power to ban crypto ATMs

Australia’s national financial intelligence agency would have the power to restrict or ban crypto ATMs under draft legislation from the country’s minister for cybersecurity and home affairs, Tony Burke.

Burke said during a speech at the National Press Club on Thursday that the draft legislation would give the Australian Transaction Reports and Analysis Centre (AUSTRAC) the ability to restrict or prohibit “high-risk products,” which include crypto ATMs. 

While regular bank-run ATMs are also used for scams and illegal activities, Burke said that in the case of crypto ATMs, authorities are having limited success in policing and tracking down illicit funds and are concerned they present a money-laundering risk. 

“I’m not pretending for a minute that everybody who goes in and uses a crypto ATM is a problem, but proportionately what’s happening is a significant problem in an area which is much harder for us to trace.”

Australia was initially a slow market for crypto ATMs, but adoption increased exponentially near the end of 2022 after private companies began piling into the market, and the country is now the third-largest hub for crypto ATMs, with 2,008, up from 67 in August 2022.

Crypto ATM provider argues there are already rules in place

More than half the crypto ATMs in Australia are operated by three providers: Localcoin, with 868 in its stable; Coinflip, with 682 ATMs; and Bitcoin Depot, with 267.

In a statement to Cointelegraph, a Coinflip spokesperson said that crypto ATMs are already subject to strict rules and Know Your Customer verification, which includes submitting valid government-issued identification before conducting any transaction.

AUSTRAC has previously led several crackdowns on crypto ATMs, and in June, it rolled out new operating rules and transaction limits.

Machines also have other safety measures 

Coinflip said the machines have cameras, pre-transaction monitoring via blockchain analytics and real-time scam warnings to help curb bad actors.

Related: New Zealand bans crypto ATMs in crackdown on criminal cash conversions

“Crypto ATMs are an important bridge between the physical and digital world, taking cryptocurrency out of the cloud and into the physical world using a familiar experience,” the spokesperson said.

“As traditional ATMs continue to decline across Australia, interest in cryptocurrency surges, and banks maintain a restrictive posture toward digital assets, the environment is primed for CATMs to thrive.” 

New powers will be optional

Burke said the government won’t be pushing for an outright ban on the machines or recommending a course of action for AUSTRAC because it might result in a “legal challenge.”

Still, he intends to give “them the power to be able to restrict or ban those devices,” so the agency has the tools to police new technology as it decides.