Australia Moves to Arm AUSTRAC With Strong Crypto ATM Powers

Australia plans new powers for AUSTRAC over crypto ATMs. Minister Tony Burke outlined a draft law that lets the agency restrict or ban “high-risk products,” including crypto ATMs.

He delivered the remarks at the National Press Club on Thursday.

Burke said the government will not push an outright ban on crypto ATMs. Instead, AUSTRAC would decide whether to restrict, prohibit, or regulate crypto ATMs as high-risk products.

He said the structure reduces legal risk and allows faster responses. Burke cited tracing problems with crypto ATMs and illicit flows. He contrasted them with bank ATMs.

“I’m not pretending for a minute that everybody who goes in and uses a crypto ATM is a problem,”

he said.

“But proportionately what’s happening is a significant problem in an area which is much harder for us to trace.”

AUSTRAC Enforcement History on Crypto ATMs: Rules, Crackdowns, and Limits

AUSTRAC has targeted crypto ATMs before. The agency led several crackdowns on machines it viewed as higher risk.

Those efforts focused on cash-to-crypto conversion points and compliance gaps.

In June, AUSTRAC introduced new operating rules and transaction limits for crypto ATMs. Operators had to align processes with clearer thresholds. These steps aimed to raise baseline controls across the sector.

The draft law would formalize stronger tools. With explicit authority, AUSTRAC could restrict certain crypto ATM use cases. It could also adjust limits and data requirements if laundering risks increase.

Crypto ATM Providers: KYC, Cameras, and Blockchain Analytics

A Coinflip spokesperson said crypto ATMs already follow strict compliance rules.

They highlighted Know Your Customer (KYC) with government ID before any transaction. That process verifies the user at the machine.

The provider pointed to cameras at crypto ATMs and pre-transaction checks.

They use blockchain analytics to screen activity and surface red flags. The machines also display real-time scam warnings to deter fraud.

“Crypto ATMs are an important bridge between the physical and digital world,”

the spokesperson said. They argued a familiar interface helps people access digital assets as traditional ATMs decline.

Australia as a Crypto ATM Hub: Rapid Growth and Operator Share

Australia expanded crypto ATMs sharply since late 2022. The country counts 2,008 machines, up from 67 in August 2022. Adoption rose as private providers deployed at scale.

This volume places Australia as the third-largest crypto ATM hub worldwide. The scale raises the stakes for AUSTRAC oversight and transaction monitoring. It also explains the draft law’s focus on high-risk products.

Three firms operate more than half of Australia’s crypto ATMs. Localcoin runs 868 units. Coinflip operates 682. Bitcoin Depot has 267. The figures come from Coin ATM Radar.

Legal Design of the Draft Law: Flexible AUSTRAC Powers for Crypto ATMs

Burke said prescribing a specific outcome for AUSTRAC could invite a legal challenge.

Therefore, the draft law avoids directing a ban on crypto ATMs. It instead supplies the authority to act on “high-risk products.”

The framework lets AUSTRAC choose a response based on risk. The agency could restrict certain crypto ATM transactions.

It could also prohibit devices if risk thresholds are met. Burke noted future uncertainty around new products.

The power extends to similar high-risk technologies beyond crypto ATMs. That gives AUSTRAC room to respond without new legislation each time.

Risk Rationale: Crypto ATMs, Tracing Difficulties, and Illicit Finance

Authorities report lower tracing success with crypto ATMs than with bank ATMs. The cash-to-crypto path can complicate audits and recovery efforts. Burke linked the draft power to these operational realities.

He acknowledged most crypto ATM users are legitimate. However, he said the proportion of risky activity is higher and harder to track. Hence the “high-risk products” designation for crypto ATMs.

The AUSTRAC toolkit could include tighter KYC, stricter thresholds, and targeted restrictions. Those measures aim to reduce laundering risk at crypto ATMs while maintaining lawful access.

Operator Claims: Crypto ATM Controls, User Alerts, and KYC Flow

Coinflip says crypto ATMs require valid government ID before use. That KYC step links transactions to verified identities. The firm says this aligns with existing AUSTRAC expectations.

Machines employ cameras at cash points to record sessions. Providers pair that with blockchain analytics for pre-transaction screening. The goal is to flag suspicious patterns before funds move.

Real-time scam warnings appear on crypto ATM screens. Providers say alerts help vulnerable users spot fraud cues. They frame the prompts as a front-line defense at the device.

Regional Lens: New Zealand Ban and Australia’s Optional Powers

New Zealand banned crypto ATMs to curb criminal cash conversions. The policy targets laundering risk at cash on-ramps. That move highlights a regional trend toward stricter controls.

Australia’s draft law follows the same risk logic, but with optionality. AUSTRAC could restrict or ban crypto ATMs, depending on evidence. The government will not mandate a blanket prohibition.

Burke said AUSTRAC needs discretion for similar products that may emerge. The “high-risk products” label keeps the scope broad. Crypto ATMs remain a current focus of that scope.

What Changes Next: AUSTRAC Process, Crypto ATM Operations, and Limits

If adopted, the draft law would expand AUSTRAC powers quickly. The agency could tailor rules for crypto ATMs and adjust transaction limits. It could also formalize analytics and reporting standards.

Crypto ATM operators would align controls with the new framework. That may include tighter KYC, enhanced monitoring, and refined alerting. Providers already cite cameras and analytics as standard.

Burke’s plan keeps the decision with AUSTRAC. The regulator would choose whether to regulate, restrict, or ban crypto ATMs as “high-risk products.”