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Crytocurrency ATMs will be banned under proposed legislation due to their vulnerability to criminal activity — but one of the country's largest providers says the move is a "step back" for the digital economy.
Associate Justice Minister Nicole McKee announced on Wednesday that the Government would ban crypto ATMs as it worked to reform its anti-money laundering and countering terrorism financing programme (AML/CFT).
She told 1News the machines were a "sound form of money laundering" and were used for criminal purposes.
"In fact, we caught a guy overseas who used crypto to buy meth to send here and it was over 100 kilograms of it."
She said she had been "alarmed" to hear about the use of cryptocurrencies to finance crime and purchase weapons.
"The scenario of the $107 million that had been laundered through criminal organisations made me realise we don't need those here in New Zealand."
CoinFlip, one of the country's largest providers with around 120 machines, said the ban on crypto ATMs was a "step backward" that failed to address the underlying illicit behaviour.
"We believe the Government can achieve their goals while also encouraging innovation by implementing smart, effective regulation that targets bad actors while preserving physical and convenient options to participate in the digital economy."
The company suggested the Government should consider adopting a set of best practices, such as wallet pinning to reduce the sharing of accounts, a photographic record, pre-transaction monitoring to proactively block malicious transfers, and real-time scam warnings.
New Zealand would be joining a growing list of countries prohibiting use of cryptocurrency ATMs.
In March 2022, the United Kingdom’s Financial Conduct Authority declared all crypto ATMs illegal, citing non-compliance with registration and anti‑money laundering rules.
The Monetary Authority of Singapore placed a moratorium on crypto ATMs in 2022, as part of a wider crackdown on the unregulated crypto sector.
China banned most cryptocurrency transactions, effectively prohibiting all Bitcoin ATM operations, in September 2021. Similar restrictions were in place in Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.
