The German Federal Financial Supervisory Authority (BaFin) recently launched a coordinated nationwide crackdown on unlicensed cryptocurrency ATMs, highlighting the increasing regulatory scrutiny on the cryptocurrency market.

The operation, which took place on August 20, targeted 35 locations across the country, resulting in the seizure of 13 cryptocurrency ATMs and a substantial sum of $28 million in cash from operators operating without proper authorisation.

This crackdown is part of BaFin’s efforts to crack down on illegal activities in the cryptocurrency market, such as money laundering and terrorist financing.

BaFin’s decisive action was necessitated by the risks associated with unlicensed ATMs, particularly their potential involvement in scams, fraud, and money laundering activities, all of which pose significant threats to the stability and integrity of the financial system.

In accordance with German banking law, operators of cryptocurrency ATMs are mandated to obtain authorisation from BaFin, and those found to be operating without a license could be subjected to severe legal consequences, including imprisonment for up to five years.

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The authority has been working closely with law enforcement agencies to identify and shut down unlicensed operators in order to protect investors and maintain the integrity of the financial system.

This extensive operation, conducted in collaboration with federal police and the Bundesbank, sought to address the growing number of unregulated cryptocurrency ATMs, which were found to be in violation of the licensing requirements outlined in Section 32 of the Banking Act.

BaFin emphasized that the unregulated nature of these machines increases the likelihood of their exploitation for illegal activities such as money laundering and financing of terrorism, further made worse by their failure to adhere to the prescribed rules for customer identity verification,a crucial measure in combatting financial crimes.

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The crackdown on unlicensed ATMs in Germany is part of a wider global effort to establish tighter controls over the cryptocurrency market.

Notably, the decline in the number of Bitcoin ATMs worldwide has been attributed to a range of factors, including legal actions taken against companies operating without proper licenses. For instance, Bitcoin of America encountered legal issues in the United States, contributing to this trend.

Germany’s firm response reflects the broader international trend towards heightened oversight of cryptocurrency transactions. In a notable development, it froze over $2.4 billion linked to fraudulent activities in the first half of 2024, highlighting the significant scale of illicit actions in the cryptocurrency space.

Through these concerted efforts, Germany aims to set a standard for a legal and secure environment for all cryptocurrency transactions, sending a clear message that unlicensed operations will be met with serious penalties, including imprisonment for up to five years.