Bitcoin ATM operators face regulatory pressure as scams and money laundering grows – The Average Joe
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    Bitcoin ATM operators face regulatory pressure as scams and money laundering grows

    victorlei

    August 29, 2022

    To all our fellow geriatric millennials, Bitcoin ATMs have given us a simpler way to buy $BTC and scammers more ways to take our money. The growth of Bitcoin ATMs has exploded over the years, and now, Bitcoin Depot wants to become the first public Bitcoin ATM company…

    Digital currencies are getting more physical

    Bitcoin ATMs, a.k.a. Bitcoin Teller Machines (BTMs), let people buy and sell Bitcoin with cash. They’ve grown 3,925% since 2017 to 39,000+ machines globally, 88% located in the U.S. Even Walmart and Circle K joined in on the action last year.

    Alongside a slowing crypto market, the number of BTMs fell from 2,000+ installed each month to 92 removed this August — the first net drop since November 2015.

    Why use BTMs? No identification is needed, and it can be simpler and faster than buying on crypto exchanges. But these advantages also draw criminals.

    • Scams: One woman deposited her retirement savings straight into the scammer’s wallet after scanning a QR code from a BTM.
    • Money laundering: BTMs have become a way for drug traffickers to hide payments — with one man sentenced to prison for attempting to launder $25M.

    They’re also prone to hacks and are marketed to individuals with little crypto knowledge – setting them up for scams.

    Many BTMs operate in gray zones

    A lack of regulation has led to a growing number of BTM-related frauds — attracting the attention of regulators.

    • In a February report, The U.S. Government Accountability Office recommended the IRS and other federal agencies intensify their scrutiny of the sector.
    • So far, the U.S. has had few resources to tackle the problem, but with scams becoming more prevalent, it might only be a matter of time.

    Kiosk Marketplace expects state regulators to become more involved over the next 12-24 months. Even Singapore – one of the most crypto-friendly countries – shut down its BTM operations, while the U.K. closed 81 BTMs in March.

    While many BTMs are run by legitimate operators, some are run by unlicensed operators — with little incentive to stop illicit activity when BTM fees range from 7%-20%.

    Investors: Bitcoin ATM operator hitting the stock market

    Bitcoin Depot – the largest BTM operator in the world with almost 7,000+ machines (17.9% market share) – is going public via SPAC, valuing the company at ~$885 million. The company — which already has a razor-thin 10.8% gross margin — is trying to go public in one of the worst environments for the BTM markets.

    The odds are stacked against Bitcoin Depot, and for many, the question remains: Are BTMs even needed?

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