There are now thousands of cryptocurrency ATMs around the world. The question is are crypto ATMs legal in Malaysia? What does the Securities Commission Malaysia say about crypto ATMs?

Recently, the Securities Comission (SC) of Malaysia released a statement cautioning investors against using Crypto Automatic Teller Machines (ATM) in Malaysia.

Cryptocurrency: A digital/virtual asset/currency decentralized and distributed across a large number of computers and networks using digital signatures and cryptography to keep transactions secure.

According to the SC, Crypto ATMs are ATMs that enable individuals to buy and/or sell digital assets via cash, debit or credit cards, or e-wallets. These machines are being put in multiple locations around the country to exchange different types of digital assets with fiat currency and others.

“The SC wishes to alert the public that entities operating Crypto ATMs are considered to be operating a Digital Asset Exchange (DAX) which require registration with the SC. In this regard, the SC has not authorised any entity to operate Crypto ATMs. Those who do so are not protected under the Malaysian securities laws and are exposed to various risks, including fraud and money laundering.” ~Securities Commission of Malaysia

How do Crypto ATMs work?

Crypto ATMs work quite similarly to normal banking ATMs with some additional steps and linkage to cryptocurrencies.

  1. A Crypto ATM will require users to confirming the user’s identity by asking users to put in his/her mobile number.
  2. A verification code will be sent to the mobile number which users can continue with transactions once verified.
  3. A user then decides whether to buy or sell cryptocurrencies.
    • To buy, a users inserts cash into the ATM and generates a QR code on their mobile crypto wallet to be scanned and then the crypto is transferred in.
    • To sell, a user needs to scan the QR code provided by the ATM to send the cryptocurrency. Some ATMs can give immediate cash immediately while others may take some time to process the transaction. Usually crypto ATMs process and verify transactions faster.

Risks to Crypto ATM users

Crypto ATMs can impose some risk for its user. These ATMs with the underlying asset being cryptocurrency can be used to send funds for money laundering, criminal activity and high-risk transactions. Regulators in various countries including the US and Malaysia have targeted crypto ATMs.

The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) is the primary statute governing the AML/CFT in Malaysia. Some other countries have also passed laws requiring all deals above a certain amount to be reporting as part of measures to prevent money laundering and terrorism funding.

SC has issued a statement that any entity not protected by the Malaysian Securities laws are exposed to multiple risks including money laundering and fraud. SC has called for all unauthorised Crypto ATM operators to immediately cease.

“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 million or imprisonment up to ten years or both,” ~Securities Commission Malaysia.

Overall

You can check on the Securities Commission site if you wish to verify whether a digital asset operator is registered with the SC or not. The public should be cautious and alert before performing any high risks transactions with crypto ATMs and make sure to abide by the law. Do check with authorities before you proceed with any digital asset transactions.

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Do you think Crypto ATMs should be regulated and made legal?