Canada proposes ban on crypto ATMs as fraud cases mount

Canada is proposing to ban crypto ATMs as part of a broader crackdown on fraud and money laundering, citing growing evidence that the machines have become a key tool for scammers.

The measure, included in the Liberal government's Spring Economic Update released Tuesday, would eliminate crypto ATMs nationwide. Officials described the machines as a "primary method" for defrauding victims and laundering illicit funds.

"To protect Canadians by shutting down a primary method for scammers to defraud victims, and for criminals to place their cash proceeds of crime," the government said, it plans to prohibit the machines entirely.

A crypto ATM (automated teller machine) may sound similar to a traditional cash machine that dispenses money from your bank account, but it works very differently. Instead of withdrawing cash, these machines let users convert physical cash into cryptocurrencies like bitcoin, which can then be sent to a digital wallet anywhere in the world, while bypassing traditional banking channels. That’s where the money-laundering risk comes in.

The proposal follows mounting concerns from law enforcement and regulators that crypto ATMs have become central to fraud schemes.

A 2023 internal analysis by Canada's financial intelligence agency, FINTRAC, found that bitcoin ATMs are likely to remain "the primary method" fraudsters use to collect and launder funds from victims.

Canadian lawmakers are debating banning crypto as a payment method for electoral donations, citing concerns about the anonymity of fund transfers.

Canada was home to the first bitcoin ATM, installed in a downtown Vancouver coffee shop in 2013.