Over the last three years, the number of cryptocurrency ATMs has increased by 700%. This is indicated by data from the DRIVE Markets exchange. According to the company’s research, on January 1, 2016, 501 automatic teller machines for digital coins were in operation, and in 2019, the figure has reached 4,128. Experts believe this trend is related to the growing popularity and confidence in the crypto industry and the simplicity and accessibility of the devices compared to digital assets exchanges.
Like Regular ATMs, Only for Crypto
The leading companies producing Bitcoin machines assure that users from countries where there is no high-quality Internet connection really need ATMs. Despite the essence of the blockchain industry, which excludes intermediaries, their market with the physical presence of “iron” in the form of ATMs is alive and well. Matias Goldenhörn, director of Latin America operations at the ATM operator Athena Bitcoin, says that the market is flourishing and ATMs are “becoming a real alternative to banks” as “the machines have proven resilient to the price fluctuations.”
Indeed, crypto machines look like traditional ATMs and operate according to the same principle of “depositing and withdrawing” currency. The only difference is that instead of a plastic card, a crypto wallet is used. ATMs work with such coins as Bitcoin, Ether, Litecoin, Bitcoin Cash, Zcash, Dash, Monero, and Dogecoin. This is due to the popularity of the assets and the sponsorship educational initiative on the part of the state. For example, as an experiment, Dash allocated more than $900,000 in grants to Brazil and Venezuela to incentivize their economic development.
Jorge Farias, the CEO of the Panama-based startup Cryptobuyer, is confident that government support helps the entire crypto industry and, in particular, crypto ATMs, which will make the purchase and exchange of digital assets a more accessible process for all categories of the population.
To use a crypto ATM, users need to have a digital wallet to be credited. The devices provide an opportunity to choose the language and the desired currency, and the fee is automatically set—the figure often varies from 4% to 10%, depending on the rules of the manufacturer. But the operator’s fee can be changed for an additional charge.
Moe Adham, the co-founder of the crypto ATM retailer BitAccess, believes that machines that support several assets provide almost instant liquidity for cryptocurrencies. Thanks to the near-instant exchange, users that don’t have access to a high-speed and uninterrupted Internet connection can use the crypto ATMs and always maintain purchasing power. Adham is confident that crypto ATMs can become a communication and payslip tool for the industry.
Where Crypto ATMs Are Located, and What They Actually Are
Most crypto ATMs are currently located in North America. In the U.S., there 2,532 of them, and in Canada, 700. There are about 500 crypto machines in Europe, namely in Austria (262), in the U.K. (290), and in Spain (80). Demand from the Latin American and Asian markets and users from Australia is growing rapidly, as the operators of Bitcoin machines say.
Athena Bitcoin earned $3 million in net income in 2018, after installing 25 new machines in Latin America. According to Athena representatives, for example, in the USA, the company’s customers mostly use crypto ATMs to buy Bitcoin, and in Colombia, on the contrary, people use ATMs to withdraw cash.
BitAccess, the fourth-largest market player, plans to extend its support to 70 coins. The company, which was founded in 2014, recently noticed that the use of ATMs did not depend on the volatility of the Bitcoin market. After all, the price of the first cryptocurrency has repeatedly decreased over the past 12 months, but the demand for the crypto machines has been growing each month.
For example, the demand and use of BitAccess ATMs increased by more than 9% in November 2018, despite the fall in Bitcoin’s price to $6,000. Since March 2018, the average amount of purchases and sales of assets has remained relatively constant and ranged from $100 to $250. The Switzerland-based retailer Lamassu also speaks about the growing demand for crypto ATM services. The indicators are most likely to grow in Asia, the Middle East, and Latin America. The company’s product is now popular in Singapore, Malaysia, and Israel.
The BitAccess manufacturer of crypto ATMs, where Mo Adham works, is the fourth most popular among companies that build and sell ATMs for digital coins. According to Coin ATM Radar, 243 BitAccess machines are located in several states in the U.S., in European countries, and in Australia. The first place in the sales of crypto ATMs is the American company Genesis Coin. Their 1,347 machines are located all over the world, in particular, in Latin America and the countries of Asia.
The company’s most popular product, Genesis1, is an ATM with all the necessary AML/KYC features; hence, users need to have an ID on them. Upon request, an additional fingerprint scanner, the ability of SMS authentication, an ID card reader, and a high-definition camera can be added to the device to comply with current legal standards.
The machine supports three cryptocurrencies: Bitcoin, Litecoin, and Dogecoin. Cash withdrawal is limited to 6,800 bills. The price of an ATM starts at $14,500.
It is noteworthy that for the distribution of its equipment, the company donated one Genesis1 ATM to the crypto community of Botswana.
The second place in terms of the number of crypto machines sold is taken by the Czech company General Bites. Most of the 1,290 ATMs are located in Europe. At the moment, General Bites offers two Bitcoin machines: BATMTwo and BATMThree. They both are based on the Android operating system. In addition to going through the KYC/AML procedure, the client must provide their email address. User verification is carried out by operators and takes about 15 minutes.
Lamassu, which has recently changed its place of registration and moved to Switzerland and is now called Lamassu Industries AG, closes the list of leaders in the production of crypto automated teller machines. The company has been operating since 2013 and managed to sell 434 devices, which are now located around the world—in particular, in the U.S., the countries of Latin America and Asia, the Republic of South Africa, Australia, and Iceland.
The first model of a crypto ATM from Lamassu called Trofa worked as a teller machine for buying Bitcoin and did not offer the ability to convert digital coins into fiat money. In May 2014, however, the company announced a new floor stand called Santo Tirso that would allow customers to exchange Bitcoin for cash, enabling two-way ATM transactions through its units for the first time.
As demand grows for crypto ATMs, which are used to buy digital assets, convert cash, and transact across borders, regulators in different countries are increasingly paying attention to the activities of Bitcoin machines.
Lamassu changed its registration due to constant difficulties with banking services. The head of the company, Zach Harvey, said that 15 banks had rejected his company only because Lamassu was producing ATMs for Bitcoin. Moreover, the company only produces hardware and is engaged in technological support of the market, not trading or storing cryptocurrencies.
In October 2018, Indian police arrested the co-founder of the local exchange Unocoin because of the opening of a crypto ATM in the city of Bangalore. Despite the absence of violations, Sathvik Vishwanath reported that the police seized the crypto machine because the company didn’t have a specific license.
Such situations and regulatory difficulties are exacerbated by questions about the classification of cryptocurrencies. Many jurisdictions have still not defined the legal status of digital assets and their components to the crypto industry. At the moment, the regulation of the cryptocurrency market puts the legitimacy of using Bitcoin ATMs at risk.
Often, shopping centers that have crypto ATMs installed receive a lot of warnings from supervisory authorities about violation of the law. But there are no official documents that ATMs for digital assets are illegal. When seeing the word “Bitcoin,” legislative and supervisory authorities are frightened and look for violations that would go under articles on money laundering and fraud, says Sathvik Vishwanath, who was arrested by the police.
Russia Has Crypto ATMs, Too
The first crypto ATM in Russia was installed four years after the appearance of such equipment in the world, in January of 2017 in Ufa. Earlier, in 2016, a group of activists from the LocalBitcoin platform attempted to organize a physical Bitcoin exchange. Transactions were made exclusively in private; there were huge lines. Despite its popularity among users, in 2017, the exchange closed due to the unprofitability of the idea.
According to the Coin ATM Radar website, 51 crypto ATMs are operating now in Moscow, Rostov-on-Don, Omsk, Krasnoyarsk, Voronezh, and other cities of the Russian Federation.
Local Bitcoin ATM producers are operating in Russia, which assemble their own equipment for working with digital assets. One of the first companies that took up crypto ATMs in Russia was Malavita’s RusBit. According to the documents, the firm, based in Bashkiria, develops unique software for the exchange of cryptocurrencies via RusBit ATMs, and also sells, delivers, and installs its crypto machines all over Russia.
The company is then obliged to provide free advice and reliable information to the population of the Russian Federation about cryptocurrencies, cryptocurrency exchanges, existing fraudulent schemes and how to avoid them, and types of mining. In the fall of 2017, at the request of the Prosecutor’s Office, an on-site office audit by the Federal Tax Service Inspection and the Economic Crime Department was conducted at the premises of Malavita. As a result of the check, violations in the company’s work were not found, since the Russian manufacturer, like foreign companies, is engaged in the production of equipment, and not in the storage of cryptocurrencies.
One ATM costs from $2,000 to $2,700. The transaction fee ranges from 4−6%. In September of last year, the company began selling software that can be installed on Qiwi terminals.
Another manufacturer and supplier of crypto ATMs, BBFpro, has been operating since 2017 and is based in Krasnodar. The company offers two machines with built-in software that cost $2,450 and $4,200.
BBFpro promises to connect the machine to any crypto exchange, the ability to connect other software, free system updates, and 24-hour support. The royalty, that is, the percentage of revenue, is 1%. At the moment, the project has sold 46 crypto ATMs, the average commission for which is 7%. According to BBFpro, about 450 operations are performed at one machine every day.
In general, the global trend for increased demand for crypto ATMs is supported in Russia, as local manufacturers of equipment for digital assets have emerged, which provide a full working cycle from the assembly of the equipment to its sale. In addition, the documentation of the projects does not cause suspicion of law enforcement authorities. Probably, the distribution of crypto teller machines will help make digital assets a more accessible resource to even more users.