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Bitcoin ATMs Raise Money-Laundering Concerns

Posted On: 5/28/2013

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TAGS: Bitcoins, vending machine, Bitcoin ATM, Bitcoin 2013 Conference, Financial Crimes Enforcement Network, FinCEN, money transmitter, cashless vending, digital currency, Financial Crimes Enforcement Network, FinCEN, Bitcoin guidelines

SAN DIEGO - The first-ever bitcoin ATMs made their debut at the Bitcoin 2013 Conference here in May. The machines dispense digital currency rather than banknotes. Bitcoins can be sent through the Internet anonymously, without going through a bank or clearinghouse, and this is raising concern among regulators.

In March, the government's Financial Crimes Enforcement Network (FinCEN) published guidelines explaining its view of bitcoins. In short, it sees the bitcoin as a currency or a commodity and anyone operating a bitcoin ATM as a money transmitter.

People who operate bitcoin ATMs will need to comply with state requirements, as well as federal anti-money-laundering and anti-terrorism laws, but just what it takes to legally operate them in the U.S. hasn't been fully spelled out.

Makers of the first bitcoin ATMs say they see them as vending machines that sell digital code in exchange for money (bitcoins can be used to buy products online from merchants who accept them). But the feds seem to regard the machines more like a mini Western Union office. Now the manufacturers of ATMs for the new electronic currency, unsure of their legality, say they're skittish to operate them on their own and are seeking alliances willing to shoulder the regulatory burden, which would likely come from outside the U.S.