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 is no “state regulation of their [cryptocurrency ATMs] operation.”
The watchdog also said that because of their complexity federal laws don’t provide enough protection against money laundering and other financial crimes.
The CSI looked at 30 businesses and about 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 said.
The watchdog recommended a “licensing mechanism” – such as a government ID – be required for a person to access cryptocurrency ATMs in order to curb the risk of financial fraud and misconduct.
To get a license, an applicant would have to submit a criminal report and report ongoing litigations and bankruptcy filings within the last 10 years.
The state’s investigator also recommended updating existing regulations to expand the period a person’s records are stored from the one-year period now required and apply the same standards that exist for businesses in the banking industry.