New Jersey’s independent watchdog on organized crime, public corruption and financial waste says cryptocurrency ATMs pose a risk to the public because of a lack of regulatory oversight.
According to a report released on Wednesday by the New Jersey State Commission of Investigation (SCI), there exists no “state regulation of their [cryptocurrency ATMs] operation.”
The watchdog also said federal laws were insufficient protections against money laundering and other financial crimes due to their complex nature.
The CSI looked at 30 businesses and around 300 cryptocurrency kiosks as part of a five-year investigation and found instances where the machines were used to commit scams and orchestrate “questionable transactions.”
“Some transactions appeared arranged in a way that enabled users to circumvent machine requirements to produce a valid form of identification or to avoid triggering specific federal currency reporting rules,” the report reads.
In response, the watchdog recommended a “licensing mechanism” – such as a government ID – be required when accessing cryptocurrency ATMs in order to curb the risk of financial fraud and misconduct.
Under those conditions, an applicant for licensure would be required to submit a criminal report, any ongoing litigations and bankruptcy filings within the last ten years.
The state’s investigator also recommended updating existing regulations to expand the period a person’s records are stored, exceeding the one-year period and instead “applying the same standards” that exist for businesses in the banking industry.