A Bitcoin ATM (BTM) is a physical machine that allows individuals to buy or sell bitcoins using fiat currency (like USD, EUR, etc.). These machines function similarly to traditional ATMs but are specifically designed for dealing with cryptocurrencies. Here’s a detailed overview covering various aspects of BTMs:
How It Functions
Bitcoin ATMs come in two primary types: one-way machines (allowing only purchases of Bitcoin) and two-way machines (allowing for both buying and selling). The basic steps for using a Bitcoin ATM are:
Verification: Users may need to undergo identity verification, which can range from mobile phone verification to providing government-issued ID, depending on the transaction amount and the machine’s operator policies.
Bitcoin Address: For buying Bitcoin, the user must provide a Bitcoin wallet address to which the purchased Bitcoin will be sent. This can be done by scanning a QR code with the wallet address from a mobile device. For selling, the BTM will generate a new QR code representing its wallet address to receive bitcoins.
Transaction: To buy Bitcoin, users insert fiat currency into the machine, which then calculates and transfers the equivalent amount of Bitcoin to the provided address. For selling, the machine provides a QR code for the user to send Bitcoin to, and once the transaction is confirmed, it dispenses the equivalent fiat currency.
Completion: The transaction is finalized on the blockchain, and the user receives a receipt for the transaction, which includes the transaction ID for tracking on the blockchain.
Manufacturers and Big Names
Several companies manufacture Bitcoin ATMs, with some of the most notable ones being:
Genesis Coin: A leading Bitcoin ATM manufacturer, known for models like Genesis1, Satoshi1, and Finney3.
General Bytes: Offers a range of Bitcoin ATMs and is known for its innovative software and hardware solutions.
Lamassu: One of the earliest players in the Bitcoin ATM space, known for their durable and user-friendly machines.
BitAccess: Manufactures BTMs and provides software to manage Bitcoin ATM operations.
Coinsource: Known for their user-friendly interface and strong customer service.
Buying and Operating Requirements
Purchasing a Bitcoin ATM involves contacting the manufacturer or distributor and choosing the appropriate model based on your needs (e.g., one-way or two-way, supported cryptocurrencies, etc.). The cost can vary significantly based on the machine’s features and capabilities.
Operating a Bitcoin ATM requires adherence to various legal and regulatory requirements, which can vary by jurisdiction:
Registration with FinCEN: In the United States, BTM operators must register with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB).
Money Transmitter License (MTL): Depending on the state, operators may need to obtain an MTL. The requirements for this license vary from state to state.
Compliance Program: Operators must develop and implement an Anti-Money Laundering (AML) compliance program. This includes conducting Know Your Customer (KYC) procedures, transaction monitoring, and reporting suspicious activities.
Compliance Training: Staff involved in the operation of a Bitcoin ATM must receive training on AML compliance and procedures to identify and report suspicious activities.
It’s essential for potential operators to conduct thorough research and possibly consult with legal experts to ensure full compliance with local and federal regulations before purchasing and operating a Bitcoin ATM. Compliance is critical to operate legally and avoid penalties.
