Crypto ATMs See Twice as Many Illicit Activities as Overall Industry: TRM Labs

Crypto ATMs, which allow users to purchase cryptocurrencies with cash, have become a significant catalyst for illicit transactions in recent years. A recent report by blockchain intelligence firm TRM Labs reveals that the rate of illicit activities involving crypto ATMs is double that of the broader crypto ecosystem. Between 2019 and 2024, crypto ATMs have processed about $160 million (roughly Rs. 1,342 crore) in illicit crypto transactions, the report has said.

In recent years, law enforcement agencies have ramped up efforts to implement blockchain intelligence to track and probe financial crimes. Despite these efforts, crypto ATMs are increasingly being used to exchange unlawfully obtained cash for cryptocurrency.

“Last year, illicit volumes in the cash-to-crypto industry stood at 1.2 percent of total volume, double the 0.63 percent for the overall crypto ecosystem. According to TRM, in 2023, over $30 million (roughly Rs. 251 crore) went to known scam addresses via cash-to-crypto services,” a report by TRM Labs said.

With crypto ATM machines, people can use debit cards and credit cards alongside fiat currencies to purchase crypto tokens. In its report, TRM Labs said that multiple payments sent from different ATM machines end up wiring cash-to-crypto assets to single addresses which flag off suspicious activities.

In June 2022, the global number of crypto ATMs surged to 880, according to an older Coin ATM radar report. The report had also started that on average, 16 to 23 crypto ATMs were being established at regular intervals globally.

The momentum of crypto machines being established diminished eventually. It was reported in January 2023 that only 94 machines were installed in different parts of the world between July 2022 and January 2023. El Salvador, the US, Australia, Canada, and Spain emerged among nations where crypto ATMs were established during the time.

The UK has been intensifying its crackdown on crypto ATMs since last year. In February 2023, the Financial Conduct Authority (FCA) instructed law enforcement agencies to locate and disable unregistered crypto ATMs. Authorities found that many operators were running these machines without proper registration.

The UK isn’t alone in its crackdown on crypto ATMs. Germany has recently joined in, with the Federal Financial Supervisory Authority (BaFin) seizing 13 Bitcoin ATMs in August. Authorities stated that these machines were not compliant with Germany’s Banking Act.

“While illicit actors look to cryptocurrencies to move funds faster cross-border, crypto ATMs face additional money laundering vulnerabilities due to the use of cash and lack of face-to-face communication or account open controls. As with any virtual asset service provider, proper compliance infrastructure is critical in addressing the risks,” the TRM Labs’ report noted.