Justin Sullivan/Getty ImagesThey’re tucked away in dairies, petrol stations and vape shops from Auckland to Invercargill – and, at first glance, they look like ordinary cash machines.Rather, they’re cryptocurrency ATMs. Increasingly, they have come to represent one of New Zealand’s trickiest anti-money laundering challenges.Although New Zealand first experimented with cryptocurrency ATMs more than a decade ago, they remained a novelty until 2023, when commercial operators began rolling out permanent networks. Today, there are around 200 nationwide.With their expansion has come concerns that the machines can be exploited by scammers and organised crime groups to convert cash into virtual assets that are difficult to trace.Supporters, meanwhile, argue they provide a way for cash-reliant New Zealanders to access cryptocurrencies and other digital payment technologies.Those competing concerns prompted the government to consider banning crypto ATMs altogether. Instead, it has opted for targeted regulation, arguing the risks can be managed without removing legitimate access.Whether these machines become a legitimate part of the country’s financial system, or a growing source of consumer harm and criminal misuse, will ultimately depend on whether the right guardrails are put in place.What are crypto ATMs?Cryptocurrencies are digital assets that can be transferred without relying on a central bank or conventional banking system, and their use has grown rapidly around the world.The ATMs that provide access to them, however, work much like the cash machines most people already know. Feed in cash, scan a QR code, and Bitcoin or another cryptocurrency – rather than banknotes – is sent to a digital wallet.While “two-way” crypto ATMs exist that allow users to sell crypto for physical cash, the vast majority of machines in New Zealand are “one-way” – operating purely as cash-deposit kiosks to buy virtual assets.In New Zealand, operators require customers to verify their identity before they can buy cryptocurrency. Once verified, the transaction can usually be completed in just a few minutes.One potential benefit of crypto ATMs is broader access to digital financial services. An estimated 51,000 New Zealand adults were without a bank account in 2021, with barriers to banking often falling hardest on victims of family violence, homeless people, former prisoners, people with disabilities and older people.For others, crypto ATMs can provide access to emerging digital payment systems, including stablecoins such as NZDD, which New Zealand’s Financial Markets Authority recently recognised as a payment tool.The drawbacks, however, are substantial.Crypto ATMs are a far more expensive option than traditional online exchanges – web platforms where users buy digital assets using linked bank accounts or cards.While online exchanges usually charge minimal transaction fees of less than 2%, physical kiosks apply heavy layered charges. Typical ATM costs include transaction fees of 6–19%, flat fees of NZ$1–5, exchange-rate markups of 5–10%, and network fees – taking a sizeable bite out of what buyers actually end up with. Cash spent Fees paid Crypto received Crypto ATM (typical fee ~15%) $10,000 $1,500 $8,500 Online exchange (