New Zealand has officially banned cryptocurrency ATMs as part of a broader effort to combat money laundering and terrorist financing. Associate Justice Minister Nicole McKee announced the ban as part of a reform of the country's Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regime. This decision reflects growing concerns that these machines are being exploited for illicit activities.

Why the Ban?

Crypto ATMs, which allow users to exchange cash for cryptocurrencies like Bitcoin, have become a convenient tool for criminals seeking to launder money and finance illegal operations. These ATMs often have minimal identity verification processes, making it easy to convert cash into digital assets and transfer them overseas quickly.

Minister McKee highlighted specific instances where crypto ATMs were used for criminal purposes. One case involved over 100 kilograms of methamphetamine being purchased with cryptocurrency acquired through these machines. Another involved NZ$107 million (approximately $64 million USD) laundered through criminal organizations. According to a report by New Zealand's Ministerial Advisory Group on Transnational, Serious and Organised Crime, there were approximately 200 crypto ATMs across the country, often located in places like supermarkets, convenience stores, and gas stations. These ATMs enable criminals to purchase cryptocurrency and transfer it offshore within minutes to fund drug imports or facilitate scams.

The Implications

The ban on crypto ATMs is part of a larger effort to tighten New Zealand's financial crime defenses. The government is also introducing a $5,000 cap on international cash transfers to prevent criminals from moving funds offshore. Additionally, the Financial Intelligence Unit (FIU) will have expanded powers to gather data on persons of interest, enabling more effective monitoring and enforcement.

The government believes these measures will make it more difficult for criminals to convert cash into high-risk assets like cryptocurrencies. By targeting the methods criminals use to launder money, New Zealand aims to create a more secure financial system while allowing legitimate businesses to operate efficiently.

Industry Response

The response to the ban has been mixed. CoinFlip, one of New Zealand's largest crypto ATM providers, has criticized the decision as a step backward for the digital economy. The company argues that the government could achieve its goals by implementing smarter regulations that target bad actors while preserving convenient options for people to participate in the digital economy. CoinFlip suggested measures such as wallet pinning, photographic records, pre-transaction monitoring, and real-time scam warnings.

Global Trend

New Zealand is not the first country to crack down on crypto ATMs. In March 2022, the United Kingdom's Financial Conduct Authority (FCA) declared all crypto ATMs illegal due to non-compliance with registration and anti-money laundering rules. Similarly, the Monetary Authority of Singapore placed a moratorium on crypto ATMs in 2022. These actions reflect a growing international concern about the potential for crypto ATMs to be used for illicit purposes. Australia is also increasing scrutiny of crypto ATM operators.

New Zealand's Broader Crypto Regulations

While New Zealand has banned crypto ATMs, it's important to note that cryptocurrency itself remains legal in the country. New Zealand treats digital currencies as property rather than legal tender, and crypto trading has been legal since 2018. However, the government is taking steps to enhance transparency and combat tax evasion in the crypto space.

The OECD's Crypto-Asset Reporting Framework (CARF), implemented through the Taxation Act 2025, will require crypto asset service providers (CASPs) to report crypto transactions. Additionally, the Conduct of Financial Institutions (CoFI) legislation introduces fair conduct principles for financial institutions dealing with crypto assets. The Financial Markets Authority (FMA) also has a regulatory sandbox for fintech companies, including blockchain corporations, to test innovative products under supervision.