The cryptocurrency business has rapidly escalated during the pandemic. Some may attribute the meteoric rise to the pandemic and the need for cashless transactions. Still, others credit the rise to the anonymity that Crypto provides. The bottom line is that Crypto has experienced an astronomical increase in uptake, and things are only getting better.
In the United States alone, there are 42,000 machines as of August 2021, according to How Many Bitcoins in America. The increase in Bitcoin ATMs represents a 177% increase in the number of Bitcoin ATMs in the U. S. It is noteworthy that the first ATMs were installed only seven years ago.
This rapid growth in the number of Bitcoin ATMs signals that the popularity of Bitcoin is on the rise. Despite Crypto’s association with market volatility and the vague regulation framework, the Cryptocurrency business is definitely on the rise.
Bitcoin is becoming a popular transaction method every day. Bitcoin ATMs are now becoming a common feature in many convenient stores and gas stations. With their popularity on the rise, it is just a matter of time before these ATMs become a permanent feature in our stores. This blog post will highlight the considerations you should make before installing a Bitcoin ATM.
What is a Bitcoin ATM and How Does it Work?
A Bitcoin ATM is an Automated Teller Machine that allows you to exchange your currency (cash) into Bitcoin. It also allows you to convert your Bitcoin to cash. It is very similar to the conventional ATM that dispenses cash.
It is critical to point out that one must have a Bitcoin wallet to use a Bitcoin ATM. According to Investopedia, A Bitcoin wallet is a digital wallet used to send and receive Bitcoins. This is analogous to a physical wallet. However, the wallet stores the cryptographic information used to access Bitcoin addresses and send transactions instead of storing physical currency.
With the explosion in the popularity of Cryptocurrency, particularly Bitcoin, many businesses are keen on installing Bitcoin ATMs. Bitcoin ATMs have been proven to attract a lot of foot traffic to many business locations hence their popularity among business owners.
Business owners must consider, however, the implications of installing Bitcoin ATMs on their premises. As it stands, the regulatory framework surrounding Cryptocurrency is still rushing to catch up with the industry’s rapid growth. Businesses must consider the potential risks to their businesses and customers before engaging any Bitcoin ATM provider.
That notwithstanding, Bitcoin ATMs have many benefits to offer small businesses. The foot traffic they drive to the c-store or gas station offers the business many opportunities for cross-selling and increased revenue. As Bitcoin increases in popularity, businesses will have to adopt the Bitcoin ATMs to keep pace with their consumers.
Licensing and Regulation
Because of the ever-changing cryptocurrency world, the traditional licensing and regulatory bodies have a hard time keeping up. There are, however, key licensing and regulatory requirements that you must have before setting up a Bitcoin ATM. The regulations differ from state to state, and there is no uniform regulation policy that cuts across.
Bitcoin ATMs are regarded as Money Service Businesses (MSBs) which are treated as non-banking financial institutions. MSBs are required to comply with the rules and regulations set out by the Financial Crimes Enforcement Network.
The downside is that these rules and regulations were enacted a long time ago before Bitcoin was invented. That means these rules and regulations do not protect consumers and small businesses from fraud or financial crimes. Therefore, it is up to Bitcoin ATM providers to take further steps to protect their retailers and consumers from financial crimes.
When choosing a Bitcoin ATM provider, it is essential that you ascertain that the Bitcoin ATM provider is Bank Secrecy Act and Anti-Money Laundering- compliant. AML compliance is especially crucial because it focuses on the Know Your Customer element (KYC).
KYC is important because Bitcoin ATMs are often considered as being lax on KYC requirements. This laxity may result in unscrupulous actors taking advantage of the ATMs to perform fraudulent transactions.
The benefits of ensuring that the Bitcoin ATM provider you choose is appropriately licensed and accredited are numerous. First off, you take all the necessary precautions to prevent your Bitcoin ATM from being used in fraudulent transactions. This provides your customers with a safe and hassle-free transaction point.
It also helps you avoid unnecessary interruptions to your Bitcoin ATM service because of investigations into fraudulent activities through your Bitcoin ATM. When it comes to the Bitcoin ATM space, a good reputation is critical.
Ensure that your Bitcoin ATM provider has a solid commitment to adhering to BSA/MLA compliance.
Manufactures and Operators
The rise of the Bitcoin ATMs has seen many players scramble to join the industry. Alongside traditional ATM providers, there are new entrants into the Bitcoin ATM manufacturing industry.
It is critical to note that Bitcoin ATMs may differ from traditional cash dispensing ATMs. The hardware and software requirements are very different. While a traditional ATM’s primary function is to dispense cash, a Bitcoin ATM has several functions.
Bitcoin ATM should be able to:
1. Convert cash into Bitcoins
2. Perform Bitcoin transactions across various platforms
3. Convert Bitcoin into cash and dispense the cash in real-time
4. Transact in other forms of Cryptocurrency
A good Bitcoin ATM manufacturer should be able to outline the functions that their ATMs can undertake. In addition, most Bitcoin ATM manufacturers are starting to integrate more functions into their Bitcoin ATM services.
Companies like American Bitcoin ATM have added many essential functions in their quest to provide superior Bitcoin ATM services. Some of the additional services these companies provide include:
- Security. The company does not take any ownership of your Crypto. You can choose which Crypto to work with, and all your transactions are 100% secure.
- Fast and hassle-free. You do not have to wait for weeks to get your account approved online. You can walk into any ATM nearby and get verified in minutes.
- 24/7 access. Most of their ATMs are located in places that are easily accessible any time of the day and offer ample parking.
- Allow trading in multiple Cryptocurrency. In addition to Bitcoin, you can trade in Ethereum, and more cryptocurrencies are being added daily.
- Live text and phone support. Customer care agents are always ready to offer real-time text /phone support whenever you use their platform.
Ethical Business Practices
It is essential to consider the business practices of our cryptocurrency service provider. Businesses should not just be concerned about the revenue they can generate from installing Bitcoin ATMs. They should also be keen to know and understand the business practices of their ATM provider.
It is critical that you choose a service provider with strong relationships with banks and other regulatory authorities. It is wise to ensure that your cryptocurrency provider is audited annually by an accredited independent auditor. If your cryptocurrency provider’s AML compliance team does not have strong relationships with regulatory authorities, then you may open up your business to fraud.
Protect your clients and your business by avoiding partnerships with cryptocurrency providers that prioritize revenue over regulations. These partners may engage in unethical and illegal business practices.
Companies that do not follow proper KYC protocols and allow anonymous transactions are usually a red flag for illegal activities such as money laundering, customer fraud, human trafficking, and many other such activities.
Before partnering with a cryptocurrency service provider, ensure that the provider follows KYC protocols per the Office of Foreign Asset Control guidelines.
Experience In The Financial Sector
To build a successful business in the cryptocurrency industry, a company should have a diverse team with vast experience in the financial sector. A good company has members within its management team that have experience in the banking industry. This team will help the company navigate the regulatory and compliance minefield in the cryptocurrency industry.
There are several questions you can ask when meeting with a Bitcoin ATM provider to ascertain the experience of a cryptocurrency provider. These questions include:
- How many fraud specialists do you have, and what protocols do you employ to prevent fraud?
- Do you allow customers to transact anonymously, and what systems do you have to verify your customers’ identities?
- Can you block transactions and ban customer accounts that engage in criminal activities such as terrorist financing and child trafficking?
It is essential to understand that while the cryptocurrency business is expanding rapidly, many regulatory and oversight challenges are still to be overcome. Bitcoin ATMs are a great way to increase your revenue and generate foot traffic to your business. It is crucial to ensure that the Bitcoin ATM provider you choose is the perfect match for your business.
- How to Get Your Business Ready for the Bitcoin Surge?
- What Is a Bitcoin ATM?
- Bitcoin ATM Regulations: What You Need to Know
- How Do Bitcoin ATMs Compare to Crypto Exchanges?
- Bitcoin ATM Regulations by State: An Overview