Investors exposed to the risks of fraud and money laundering by unauthorised crypto ATM operators

By Lee Min Keong

The Securities Commission Malaysia (SC) has warned the public against the usage of Crypto Automatic Teller Machines (Crypto ATMs). 

Crypto ATM is a machine that allows individuals to buy and/or sell digital assets via cash, debit/credit cards or e-wallets. 

These cryptocurrency ATMs have been installed in various locations in Malaysia, facilitating the exchange of different types of digital assets with fiat currency and vice versa. 

The SC also alerted the public that entities operating Crypto ATMs are considered to be operating a Digital Asset Exchange (DAX) which require registration with the financial regulator. 

“In this regard, the SC has not authorised any entity to operate Crypto ATMs. As such, we wish to caution and remind members of the public not to deal with unlicensed or unauthorised entities or individuals. 

“Those who do so are not protected under the Malaysian securities laws and are exposed to various risks, including fraud and money laundering,” the SC said in a statement.

The SC also warned all unauthorised Crypto ATM operators in Malaysia to immediately cease their activities. 

Operating a DAX without authorisation from the SC is an offence under Malaysian securities laws.  Anyone convicted may be liable to a fine not exceeding RM10 mil or imprisonment up to 10 years or both. 

Crypto ATM network growing

According to CoinATMRadar, there are currently a total of 6,588 Bitcoin ATMs in the world. Close to 2,000 ATMs were added in 2019 alone. Crypto ATMs can be found in over 70 countries worldwide but there is a very strong concentration in North America (77.9%).

That might seem like a lot, but to put things in perspective, there are more than 3.5 million fiat currency ATMs throughout the world. 

Most crypto ATMs are specialised to allow you to buy Bitcoin, while some also offer the option to buy a wider array of coins and may support cryptocurrencies such as Ethereum and Monero. 

While most ATMs are called ‘one-way’ ATMs, which means you can only buy Bitcoin or cryptocurrencies, there are some that also offer the option to sell your cryptocurrencies directly at the ATM. These types are called ‘two-way’ ATMs.

However, the convenience and anonymity offered by cryptocurrency ATMs comes at a price. The average buy fee on Bitcoin ATMs is 9.46% and the average sell order for crypto at the ATM will cost, on average, an additional 8.06% over market price, according to an article by coincodex.com.

Members of the public may verify if a digital asset operator is registered with the SC at https://www.sc.com.my/development/digital/digitalassets. 

Additionally, investors are encouraged to alert the regulator if they come across any suspicious activities or websites, and if they receive any unsolicited phone calls or e-mails offering investment advice and opportunities, especially those that offer high returns with seemingly little or no risks. 

Queries or complaints can be made to SC’s Consumers and Investors Department at 03-6204 8999 or e-mail: aduan@seccom.com.my.