What’s driving the growth of bitcoin ATMs?| Commentary – Kiosk Marketplace

There is no denying that bitcoin ATMs have seen incredible growth, but a number of factors are driving this rate of expansion in the bitcoin ATM space – it is not only the attractiveness or lack thereof on any given day of bitcoin.

Image provided by iStock.

(Editor’s note: An earlier version of this article ran on ATM Marketplace, a Kiosk Marketplace and Vending Times sister publi…….

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There is no denying that bitcoin ATMs have seen incredible growth, but a number of factors are driving this rate of expansion in the bitcoin ATM space – it is not only the attractiveness or lack thereof on any given day of bitcoin.

Image provided by iStock.

(Editor’s note: An earlier version of this article ran on ATM Marketplace, a Kiosk Marketplace and Vending Times sister publication.)

Today it isn’t hard to find a bitcoin ATM. Consumers can easily find them in gas stations and most convenience stores across the country.

This wasn’t the case just a few years ago. Indeed, over the past two years we have seen an absolute explosion of growth in the installation of bitcoin ATMs. According to CoinAtmRadar, today there are more than 32,000 bitcoin ATMs in the U.S. Compare that to 2020, when there were just a little over 4,000.

There is no denying that this is an incredible growth story. And while some have argued that this ongoing trend is a direct result of the value of bitcoin as an investment coupled with the economic climate, there is more to the story. A number of factors are driving this rate of expansion in the bitcoin ATM space — it is not only the attractiveness or lack thereof on any given day of bitcoin.

Printing money

One major elephant in this room is the cash infusion boom in the marketplace in 2020 that came as a result of the federal pandemic stimulus packages. That “free money” drove a surge in demand for cryptocurrencies, and we suddenly saw an influx of novice investors seeking to instantly purchase bitcoin with physical cash as a result. As the demand rose, of course it created more demand for bitcoin ATMs.

Wild west

Another factor behind the steep growth curve is the lack of clear regulation, both on a federal and state level, in the emerging crypto and blockchain space. Given the lack of understanding and clarity in the guidelines, many bitcoin ATM operators are not adhering to a sound compliance program to protect customers and the public from being victimized of fraud and the usual scams.

While a small number of bitcoin ATM operators go above and beyond with know your customer (KYC), fraud prevention and anti-money laundering (AML) protocols, others in the cash-to-crypto industry simply are not actually looking behind the curtain of their customer base and are complacent to these bad actors driving volume to their ATMs. This, in many cases, allows for several bitcoin ATM companies to profit from a significant amount of illicit and fraud-related transactions.

As a result of this lack of regulation and established enforcement protocols, we have seen an alarming number of victims of fraud and scams at bitcoin ATMs all across the country. Unfortunately, this results in significant short-term profits for bitcoin ATMs, thus incentivizing operators to continue to add more kiosk locations and also drive up the cost for retailers that charge rent for hosting kiosks.

On the horizon

Given the number of live bitcoin ATMs in the U.S., we expect to see federal and state regulators become more involved in the space in the next 12-24 months. This could lead to a reversal in the number of kiosk locations across the country, as some inadequate bitcoin ATM operators could be forced to adhere to a compliance and fraud prevention standard that they cannot achieve, thus leading them to shut down. This would be only good news for consumers, (specifically those more vulnerable to fraud, such as the elderly population), and the many bitcoin ATM operators that put consumers in front of short-term profits.

Source: https://www.kioskmarketplace.com/blogs/whats-driving-the-growth-of-bitcoin-atms/