Canada plans to ban cryptocurrency ATMs, classifying them as a “primary method used in scams”

According to CBC, in a report dated April 29, Canada’s Liberal Party’s spring economic update released on Tuesday announced that the federal government plans to ban cryptocurrency ATMs to stop fraudsters from using these machines to commit fraud. The spring economic update characterizes cryptocurrency ATMs as “the primary way fraudsters trick victims and how criminal actors store cash proceeds from crime.”

Spring Economic Update Policy Announcement and Current Regulatory Framework

According to CBC’s April 29 report, the spring economic update released by Canada’s Liberal Party on Tuesday announced plans to ban cryptocurrency ATMs, but the related announcement did not include specific implementation details for the proposed ban.

The government said the measure will ensure Canadians can still buy virtual currencies through “money services businesses (MSBs),” while better protecting money services businesses from unlawful activity.

At present, cryptocurrency ATMs and other Canadian money services businesses (MSBs) are subject to the same regulatory framework, which covers foreign exchange dealers, regular ATMs, and remittance service providers (such as Western Union). Canada has no specific regulations for the cryptocurrency ATM industry.

FINTRAC Analysis and CBC Investigation Findings

According to CBC’s April 29 report, in February 2023 FINTRAC analyzed suspicious transaction reports submitted to the agency and concluded that cryptocurrency ATMs have become the main tool fraudsters use to obtain money from victims across the country. CBC’s three-part investigative series, “Enabling Fraud: The Cryptocurrency ATM Problem,” interviewed law enforcement officials, financial regulators, cryptocurrency experts, former employees of cryptocurrency ATM companies, and fraud victims. The investigation’s findings aligned with FINTRAC’s conclusions.

Both CBC’s investigation and FINTRAC’s analysis point out that cryptocurrency ATMs do not require a bank account, funds arrive quickly, and most machines only require a phone number when depositing amounts under $1,000. They also lack a step involving human intervention. These traits were identified as the core reasons they have become the main tool for fraud.

Last fall, CBC sent interview requests to Finance Minister François-Philippe Champagne and FINTRAC asking about specific measures to address cryptocurrency ATM fraud. Both requests were not approved. When questioned by the parliamentary press, Champagne said the government is “studying, very carefully, very seriously,” all possible financial crime prevention options.

Current Situation of Cryptocurrency ATMs in Canada and International Comparison

According to CBC’s reporting, Canada currently has about 4,000 cryptocurrency ATMs—making it the country with the highest number of cryptocurrency ATMs per capita worldwide. Globally, the total number of cryptocurrency ATMs exceeds 39,000.

According to CBC’s reporting, other jurisdictions have taken action regarding cryptocurrency ATM fraud:

United Kingdom: Established a licensing regime in 2021; to date, it has not issued licenses to any operators, effectively resulting in a ban

New Zealand: Currently proposing to ban cryptocurrency ATMs

Australia: After the financial intelligence agency and police completed a large-scale investigation, it launched daily transaction limits last summer

United States: Half of the southern states have proposed or implemented related laws, including daily transaction limits per customer, transaction fee caps, and requirements for operators to refund fraud victims

Frequently Asked Questions

What is the policy basis for Canada’s plan to ban cryptocurrency ATMs?

According to CBC’s April 29 report, in its spring economic update released Tuesday, Canada’s Liberal Party categorized cryptocurrency ATMs as “the primary way fraudsters trick victims and how criminal actors store cash proceeds from crime.” FINTRAC’s February 2023 analysis also found that cryptocurrency ATMs are the main tool fraudsters use to obtain money from victims in Canada.

How many cryptocurrency ATMs are currently in Canada? What regulations oversee them?

According to CBC’s reporting, Canada has about 4,000 cryptocurrency ATMs, the highest per-capita availability in the world. Under the current framework, these machines are subject to the same rules as other money services businesses (MSBs). Canada still has no specific regulations for the cryptocurrency ATM industry.

What regulatory measures have other countries taken regarding cryptocurrency ATMs?

According to CBC’s reporting, the United Kingdom has effectively formed a ban through its 2021 licensing regime; New Zealand is proposing to ban them; Australia has introduced daily transaction limits; and in the southern United States, half of the states have proposed or implemented measures such as daily transaction limits, fee caps, and refunds to victims.