Leaders across the cash-to-crypto industry, including Bitcoin ATM (BTM) operators DigitalMint and Coinsource, blockchain analysis platform Chainalysis, and others, today announce the formation of the Cryptocurrency Compliance Cooperative (“CCC”). A collaborative association, the mission of the CCC is to create a safer environment for all consumers and legitimize the cash-to-cryptocurrency industry by bolstering compliance standards that are deemed by many to be currently insufficient.
“The nefarious use cases plaguing this industry are well documented by several law enforcement agencies, and include fraud, elder abuse, and drug and human trafficking,” said Seth Sattler, Director of Compliance for DigitalMint and leading contributor of the Cryptocurrency Compliance Cooperative. “While a small number of Bitcoin ATM operators go above and beyond with know your customer (KYC) and anti-money laundering (AML) protocols, others in the cash-to-crypto industry simply turn a blind eye and are complacent to these bad actors by simply applying the bare minimum customer protections, which in many cases allow for completely anonymous transactions.”
Organizations encouraged to apply to the CCC include cash-based cryptocurrency MSBs, regulatory bodies, financial institutions, suppliers, non-governmental and law enforcement agencies. Meeting on a minimum quarterly basis, the CCC will allow members to stay abreast of regulatory updates, new industry standards and research. Moreover, members will share best practices and learn how to collaborate with industry leaders, regulators and law enforcement on how to enforce deeper and more robust compliance protocols. In addition, the CCC will also look to stay ahead of developments and trends among threat actors, learning how to best mitigate fraud through the application of ever improving technology and forensic tools.
“Unfortunately, many BTM operators feel that merely asking for a cell phone number is enough due diligence to absolve them of their mandated KYC requirements,” said Bo Oney, Executive Vice President of Operations and Head of Compliance at Coinsource. The CCC is seeking to bolster regulatory requirements for the benefit of all BTM users and operators. In this light, we are seeking input from the most knowledgeable in the industry, all with the goal of making the cash-to-crypto space as safe as possible for consumers, operators, and industry partners.”
Since their first deployment in the U.S. in 2014, BTMs and other cash-to-crypto point-of-sale locations have helped individuals effortlessly access the world of cryptocurrencies. These machines, which resemble a traditional ATM, allow users to purchase cryptocurrencies with cash and have surpassed 42,000 installations across the U.S.
According to an independent report conducted by the State of New Jersey Commission of Investigation, nearly 75% of the BTM operators with kiosks in the state allowed certain transactions to take place without requiring the customer to provide any information outside of a cellphone number. Over half of these operators allowed for cryptocurrency transactions up to $900 with just a cellphone number, or in some cases, no information at all. Due to the prevalence and accessibility of prepaid cellphones, commonly known as “burners”, simply relying on the collection of a phone number to satisfy FinCEN KYC requirements is not a reliable way for operators to confirm identity and eliminates any reasonable transaction monitoring method to detect agents that assist with laundering illicit proceeds on behalf of nefarious actors.
“We must do better,” added Mr. Sattler. “This isn’t just an industry group – this is a movement. It’s our hope that others heed our call and join this cooperative as we push for enhanced and modernized regulations in the best interest of public safety.”
Compliance to Drive Industry Growth
The Bitcoin ATM industry is at a very important junction in driving the long-term growth and acceptance of the industry. To drive the next wave of adoption with financial institutions, banks, investment firms and others and to expand internationally, it becomes more and more crucial to hold the industry and its players accountable to the highest standards of compliance, particularly in the form of KYC and AML. The Bitcoin ATM industry is especially important to the Unbanked and underbanked citizens of the world who do not have ready access to reasonable financial services.
Many of the companies and individuals in this industry turn a blind eye to their obligations to protect their customers and their communities by not ensuring that the cash transactions enabled by their kiosks are not funding illegal activities or terrorist organizations. Rather than do all in their power to put a stop to these kinds of activities, many companies actively enable this funding through their kiosks in order to increase their profitability and expansion.
Cash-to-crypto is the combination of two high-risk transactions, and, as such, receives special attention from regulators. Many of these same regulators worldwide are actively considering and working to craft legislation to put a stop to illegal activities through Bitcoin ATM kiosks. Rather than sit and wait for this legislation to be put into place and thereby run the risk that this legislation goes too far and overly complicates operations within the Bitcoin ATM industry as a whole, the members of the CCC are committed to guiding these legislators to help them to stop the funding of illicit activities without stultifying the industry.
This announcement has been shared across 100 publications spanning more than 15 languages including major publications such as Cointelegraph, The Press and many others, signifying the widespread importance of such an initiative.
Coinsource is the world leader in Bitcoin ATMs. With a focus on compliance and ease of use, Coinsource is aiming to bring Bitcoin to the masses. Follow for blogs about Bitcoin, finance, company updates and Bitcoin ATM information!
