Experts define challenges, growth factors in the bitcoin ATM market

Bitcoin ATMs have quickly become a ubiquitous staple in many retail spaces. You can find them in places ranging from gas stations to supermarkets. In fact, there are now more than 37,000 machines in operation worldwide, according to CoinATMRadar.

There are several factors driving this growth, including accessibility.

“Bitcoin ATMs remain a popular investment avenue for consumers because they offer accessibility in an industry that otherwise still has high barriers to entry,” Gabriella Kusz, CEO of the Global Digital Asset and Cryptocurrency Association, said in an email interview. “As more people become interested in buying crypto with cash, the easy-to-use, familiar technology allows consumers to safely expand and diversify their portfolio. Bitcoin ATMs offer a safe alternative to buying cryptocurrency, and take various steps to reduce fraud risk and implement security measures for investors. As demand for bitcoin ATMs continues to grow, we will likely continue to see them located everywhere from busy cities to quiet suburbs.”

Bitcoin ATMs are also easier to use on the merchant side, while providing profit.

“The regulatory environment for cryptocurrency varies from country to country, but in many places there are few restrictions on bitcoin ATMs. This has made it easier for operators to set up new machines and expand their networks,” Mark Fidelman, founder of SmartBlocks, said in a email interview. “Bitcoin ATMs can be a profitable business for operators, as they often charge a percentage fee on transactions. As more people use bitcoin ATMs, the potential for profit increases, which can encourage more investment in the market.”

The security side is also important as users can more easily transact at bitcoin ATMs and ensure that the cryptocurrency stays in their own wallets, rather than having to go through an online exchange.

“Some people prefer to use Bitcoin ATMs for the privacy they offer. Unlike some online exchanges, Bitcoin ATMs do not require users to provide personal information, which may appeal to those who want to keep their transactions anonymous,” Fidelman said.

However, there are also some problems within the bitcoin ATM industry. First, the growth of bitcoin ATMs has slowed significantly – in some cases, many bitcoin ATMs are being removed. On February 28, for example, there was a net reduction of 1,061 bitcoin ATMs. In addition, the rate of installations has dropped, and is currently around three deployed per day, according to CoinATMRadar.

There have been several suggestions as to why the market is being held back. One is that despite being simpler than some cryptocurrency companies, there is still a lack of regulatory clarity.

“While the regulatory environment for cryptocurrency is generally becoming more favorable, there is still a lack of clarity in some jurisdictions regarding the legality and regulation of Bitcoin ATMs. This can create uncertainty for operators and potential users of the machines,” Fidelman said.

An example of this is the recent push by the Financial Conduct Authority in the UK to crack down on unregistered crypto-ATMs. The authority claims cryptocurrency ATMs in the country are not registered, which could lead to money laundering. In the UK, all cryptocurrency companies must register with the FCA.

Fidelman said other factors holding back the industry include limited cryptocurrency acceptance, high transaction fees and security concerns.

There is also the question of a major bankruptcy in the industry. Recently, Cash Cloud, the operator of Coin Cloud ATMs, filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the District of Nevada. The company had debt for an amount between $100 million and $500 million.

“The recent bankruptcy of Coin Cloud, a Bitcoin ATM operator, has raised concerns about the overall health of the Bitcoin ATM industry. Some industry experts suggest that the bankruptcy of Coin Cloud may be an indicator of a larger problem in the Bitcoin ATM market,” Fidelman said.

“The industry is relatively new and rapidly evolving, with many operators lacking the experience, financial backing or business acumen needed to succeed in a competitive market. Furthermore, the regulatory environment surrounding cryptocurrency is often uncertain, presenting challenges for Bitcoin ATM operators ., despite the challenges, the Bitcoin ATM market has continued to grow in recent years, with an increasing number of machines distributed around the world, and more people using them to buy and sell cryptocurrency. While the bankruptcy of Coin Cloud has raised concerns , some analysts see it as an isolated incident, rather than a reflection of wider issues in the industry.”

Finally, a major issue that needs to be addressed is educating the public about cryptocurrency. Although it has become more mainstream, many businesses are unaware of the benefits of deploying a bitcoin ATM.

“Despite industry turmoil, investors are still interested in crypto but often don’t know where to start,” Kusz said. “Even though bitcoin ATMs use easy-to-use technology, companies still need to provide guidance and education in the crypto space to ensure new investors make educated decisions that align with their financial goals. By providing two-way communication and reliable customer support, companies can encourage repeat customers and increase participation in the DeFi community.”