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Deployment of cryptocurrency ATMs in 2022 significantly lags the pace seen last year, and one factor hastening the slowdown is increased regulatory scrutiny, sources say. Crypto ATMs are specialized kiosks that allow consumers to purchase Bitcoin and other cryptocurrencies using cash or a debit card.
Increasingly, regulators in several countries have been tightening anti-money-laundering laws to prevent illegally obtained money from moving out of the country via cryptocurrency. Canada and Germany are two countries that have taken such steps in the past year, according to SkyQuest Technology Consulting Pvt. Ltd.
In the United States, SkyQuest says 74% of Bitcoin ATM transactions were routed out of the country in 2019, while 88% of monies transferred from crypto ATMs to virtual-currency exchanges were remitted overseas. This proportion has tripled annually since 2017, Westford, Mass.-based SkyQuest says.
As a result, several international organizations, such as the U.S. Government Accountability Office, have declared measures to tighten laws on cryptocurrency ATMs, according to Shriya Damani, director and chief executive for Skyquest. In addition to oversight by the GAO, crypto ATM operators are governed by the Bank Secrecy Act. They must also join the Treasury Department’s Financial Crimes Enforcement Network and report suspected transactions to federal agents.
“Global regulators are targeting crypto kiosks,” Damani says. “In July 2019, Spanish police identified crypto ATMs as a flaw in European anti-money-laundering legislation after discovering a single local gang that used Bitcoin ATMs to launder approximately $10 million for Columbian drug dealers.”
Despite the increased regulatory scrutiny, Damani says there are numerous opportunities for crypto ATM manufacturers and deployers to improve the technology and resolve issues arising from the increase in illegal activities.
Diminishing cryptocurrency values are another factor slowing the deployment of crypto ATMs. The good news for crypto ATM deployers is that, unlike a tighter regulatory environment, the fallout from declining crypto values tends be more short-lived due to high consumer demand for digital currency. “Consumers tend to view cryptocurrency ATMs as one of the most secure methods of purchasing and trading Bitcoins,” says Damani.
Despite the decline in crypto ATM deployments, the market showed signs it was starting to rebound in June when 817 machines were deployed globally during the first five days of the month, according to SkyQuest. By comparison, just 202 new Bitcoin ATMs were deployed during May, extending a monthslong trend. “Since January, the number of cryptocurrency ATM installations has gradually decreased, eventually falling by 89.75% from the 1,971 new installations in December 2021,” Damani says.
Part of what led to the robust deployment rate in 2021 was that half of all cryptocurrency owners in the United States, Latin America, and Asia Pacific purchased digital currency for the first time last year. That’s according to Gemini Trust Co. LLC, which operates a cryptocurrency exchange in the United States. Consumer fears of inflation also helped fuel the deployment of crypto ATM in 2021, especially in countries that had experienced currency devaluation, according to SkyQuest.
Leading crypto ATM deployers include General Bytes s.r.o., Genesis Coin Inc., Lamassu Industries AG, and Bitaccess Inc.
