How Cryptocurrencies Crashed and Government Scrutiny Sent Crypto ATMs into a Downswing – Digital Transactions
The deployment of cryptocurrency ATMs in 2022 is significantly lagging the pace of last year, and one factor accelerating the decline is increased regulatory scrutiny, sources say. Crypto ATMs are specialized kiosks that allow consumers to buy Bitcoin and other cryptocurrencies with cash or a debit card.
Increasingly, regulators in several countries have tightened anti-money laundering laws to prevent ill-gotten gains 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 US, SkyQuest says 74% of Bitcoin ATM transactions were routed out of the country in 2019, while 88% of money transferred from crypto ATMs to virtual currency exchanges was transferred overseas. That share has tripled annually since 2017, says Westford, Mass.-based SkyQuest.
As a result, several international organizations, such as the US Government Accountability Office, have declared measures to tighten cryptocurrency ATM laws, according to Shriya Damani, director and CEO of Skyquest. In addition to oversight by the GAO, crypto-ATM operators are subject to the Bank Secrecy Act. They must also join the Treasury Department’s Financial Crimes Enforcement Network and report suspicious transactions to federal agents.
“Global regulators are targeting crypto kiosks,” says Damani. “In July 2019, Spanish police identified crypto ATMs as a flaw in European anti-money laundering legislation after discovering a single local gang used Bitcoin ATMs to launder approximately $10 million for Colombian drug traffickers.”
Despite the increased regulatory scrutiny, Damani says there are many opportunities for crypto ATM manufacturers and distributors to improve technology and solve problems arising from the increase in illegal activities.
Declining cryptocurrency values are another factor slowing the deployment of crypto ATMs. The good news for crypto-distributing ATMs is that, unlike a tighter regulatory environment, the fallout from declining crypto values tends to be more short-lived due to high consumer demand for digital currency. “Consumers tend to view cryptocurrency ATMs as one of the safest methods of buying and trading Bitcoins,” says Damani.
Despite the slowdown in crypto ATM deployments, the market showed signs of picking up in June as 817 machines were deployed globally in the first five days of the month, according to SkyQuest. In comparison, only 202 new Bitcoin ATMs were deployed during May, extending a month-long 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,” says Damani.
Part of what led to the robust rate of deployment in 2021 was that half of all cryptocurrency owners in the US, Latin America and Asia Pacific bought digital currency for the first time last year. Gemini Trust Co. informs. LLC, which operates a cryptocurrency exchange in the United States. Consumer fears of inflation also helped accelerate the deployment of crypto ATMs 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.
