The German Federal Financial Supervisory Authority (BaFin) recently mandated all cryptocurrency ATMs in the country to receive licenses. The order will be applicable to all new crypto ATMs. The service providers to these ATMs can also face regulatory actions for unauthorized operations.
Provisions under the Banking Act
The regulator made the provisions under the German Banking Act. A translated version the regulator’s announcement reads,
“Proprietary trading is a financial service and financial commission business is a banking business, for which prior approval from BaFin is required.”
BaFin classified cryptocurrencies as financial instruments earlier this year. It is now carefully tightening regulations in this sector to cover all arms of the market. Apart from crypto ATMs, licensing is also mandatory for all crypto custodian service providers under the new regulatory framework. A number of German banks have approached the approval.
Crypto ATMs are not mainstream in Germany
Although cryptocurrency ATMs have started sprouting around the globe at an increasing pace, they are yet to become mainstream. Several of these machines are already operating in the US, Canada, and Europe. The top German cities have at 28 cryptocurrency ATMs according to data provider Coinatmradar.com. These ATMs allow users to buy and sell Bitcoins and offer numerous other cryptocurrencies for users including Ethereum, Litecoin, etc. The existing ATMs will also need regulatory approval under the new regime.
BaFin said that the people who are running these ATMs that are acting in the country without adequate permissions can be prosecuted. The regulator will confiscate the machine and even seal business premises. The announcement also warns against actions against service providers of unauthorized teller machines. The law will hold them complicit to illegal operations. Therefore, they must review the BaFin license before offering any infrastructure or service to ATMs.
These include companies/businesses/individuals providing premises or internet connections to the ATM machines.