Why New Zealand Regulators Targeted Crypto ATMs

New Zealand took a decisive step in combating financial crime by announcing a nationwide ban on cryptocurrency ATMs. Spearheaded by Associate Justice Minister Nicole McKee, this move is part of a comprehensive reform of the country’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework.

Crypto ATMs, which allow users to convert cash into digital assets such as Bitcoin, have long operated in a regulatory gray area. By April 2025, New Zealand had over 220 such machines scattered across convenience stores, petrol stations, vape shops, and laundromats. These kiosks offered convenient access to cryptocurrencies, often with minimal identity verification.

However, this convenience came at a steep cost. Minister McKee highlighted growing evidence that these machines had become tools for organized crime. In an interview with 1News, she cited cases involving millions of dollars laundered through crypto ATMs and referenced an instance where over 100 kilograms of methamphetamine were purchased using cryptocurrency routed via these kiosks. The ability to rapidly convert physical cash to digital currency and transfer it internationally without meaningful oversight made crypto ATMs ideal channels for illicit activities such as drug trafficking, scams, and weapons purchases.

Alongside the ATM ban, McKee also introduced a NZ$5,000 cap on international cash transfers as part of a broader anti-money laundering strategy.

CoinFlip’s Response to the Crypto ATM Ban

CoinFlip, New Zealand’s largest crypto ATM operator with roughly 120 machines, expressed disappointment at the government’s decision. The company described the ban as a setback for the digital economy, arguing that a more nuanced regulatory approach could better balance innovation and crime prevention. CoinFlip proposed alternatives like wallet pinning, photographic records, and pre-transaction risk monitoring to mitigate criminal misuse while preserving legitimate access. This reflects the broader global tension between managing risk and fostering digital innovation in cryptocurrency policy.

The Legal Status of Bitcoin in New Zealand

Bitcoin remains legal in New Zealand, where individuals can freely buy, sell, and hold cryptocurrencies. Although not recognized as legal tender, digital assets like Bitcoin are treated as property for tax purposes. Income from trading or mining cryptocurrencies is subject to income tax, and businesses involved in crypto must register and comply with AML and financial regulations. The government’s stance is cautious yet progressive, opting to incorporate digital assets within existing legal frameworks rather than banning them outright. While consumer protections are still limited, users are encouraged to transact with registered providers to ensure recourse.

This legal clarity fosters innovation but also emphasizes responsibility. The recent crypto ATM ban sends a clear message: cryptocurrency use is welcome, but criminal exploitation will not be tolerated.

Broader AML/CFT Reforms in New Zealand

The crypto ATM ban is one element of a wider reform package introduced by McKee on July 9, 2025. These reforms aim to modernize New Zealand’s AML/CFT system, balancing tougher enforcement with operational efficiency. Enhanced data-sharing powers for the Financial Intelligence Unit and streamlined compliance for low-risk businesses exemplify this approach. McKee stressed the need for an agile system that disrupts criminal money laundering while enabling legitimate businesses to thrive.

International Context: How New Zealand Compares

New Zealand joins a growing list of countries adopting strict stances on crypto ATMs, including the United Kingdom, Singapore, and China, all of which have effectively banned or restricted these machines. In contrast, Australia—New Zealand’s closest regulatory peer—has opted for a more measured approach. Rather than banning crypto ATMs, Australian authorities implemented new compliance rules in mid-2025, including transaction caps, enhanced identity checks, and scam alerts. This approach focuses on improving safety and transparency without stifling access to digital assets.