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New Jersey Crime Watchdog Says Crypto ATMs Need More Regulation

State regulation of crypto ATMs is poor and federal laws aren't much better, the commission said in a report.

New Jersey Capitol in Trenton
New Jersey Capitol in Trenton

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.

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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.

See also: New Jersey Moves Closer to Crypto License With Introduction of Senate Bill

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.

Sebastian Sinclair

Sebastian Sinclair is the market and news reporter for CoinDesk operating in the South East Asia timezone. He has experience trading in the cryptocurrency markets, providing technical analysis and covering news developments affecting the movements on bitcoin and the industry as a whole. He currently holds no cryptocurrencies.

Sebastian Sinclair