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New Bitcoin ATMs trouble regulators

20 March 2014  |  1743 views  |  0

Regulators in Boston, USA, have issued warnings about the risks involved in Bitcoin purchase, after a second ATM device was set up in the state on 17 March 2014, offering Bitcoins for sale in exchange for US dollars.

The ATMs or kiosks are produced by Liberty Teller, a small, Boston-based firm. They issue paper ‘wallets’, that look a little like a concert or plane ticket, with tamper-proof holograms fixed over a scan-able Quick Response Code. A mobile phone equipped with a camera and Bitcoin wallet can then be used to scan and upload the Bitcoin, according to Liberty Teller’s instructions.

However this has concerned regulators who are trying work out if the kiosks need an ATM licence. As the device does not issue a recognised currency, Janet Yellen, chairwoman of the Federal Reserve, recently said Bitcoin is “outside of the banking system” present they are operating without one.

The Office of Consumer Affairs and Business Regulation, Boston’s consumer regulator, wrote in its advisory “A couple of weeks ago, a Bitcoin ‘ATM’ opened up in South Station. While this operation closely resembles an ATM, the kiosk performs quite differently. It does not provide cash, but instead allows consumers to load bitcoins onto a virtual wallet either accessed by an app downloaded onto a smartphone or through a code provided on a piece of paper that is unique to each consumer.”

It went on to note “Bitcoins are not FDIC insured. Unlike credit cards, you have no right to reverse the charges if something goes wrong. The South Station kiosk also has no disclosures, leaving consumers without information about fees or where to go if there is a problem.”

The Massachusetts Division of Banks, the state banking authority, is reportedly reviewing the operation of the kiosks to determine if they will require licensing.

The Central Bank of Cyprus issued a warning on 19 March 2014 about the risks involved with Bitcoin after Cyprus-based Neo & Bee, a Bitcoin card supplier, opened its flagship branch in Nicosia on 24 February.

The firm claims, “With the Neo's Bee cards, we change the status quo on payment methods and the way we purchase physically and on the internet. No charges and unlimited freedom, instantly and without intermediaries.”

 

TagsPaymentsRisk & regulation

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