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Cryptocurrency, and Bitcoin specifically, is digital currency. It exists in the ether, a virtual asset that one cannot touch. It is technology.
The ATM is not what one pictures when they think of Bitcoin. But that’s exactly what we are going to assess here. What are Bitcoin ATMs, how many exist, and are numbers trending upwards? Let’s dig in.
What are Bitcoin ATMs?
Simply put, a bitcoin ATM is a machine with which you can buy bitcoin. You insert cash into the machine, with the equivalent value in bitcoin deposited into your (virtual) bitcoin wallet.
These ATMs used to be entirely anonymous, meaning you simply input the cash and enter the wallet address, and away you go. Today, more and more ATMs require identification to buy bitcoins, although the extent of the background checks varies. Some simply require a phone number, others go as far as requiring photo ID. The number of bitcoins you can buy at ATMs is also typically limited.
Geographical Distribution of Bitcoin ATMs
Perhaps unsurprisingly, the US ranks in first place with 32,537 Bitcoin ATMs. Canada is in second, with a distant 2,426 ATMs – showing the US is very much a runaway leader. Indeed, it houses a staggering 87% of the world’s ATMs.
Total number of ATMs installed worldwide:
Perhaps more indicative is a per capita ranking system. Even when adjusting the data to account for population, the US retains top spot with a Bitcoin ATM for every 10,000 people. For curiosity, there is a fiat ATM for every 700 people in the US, so Bitcoin still has a ways to go before overtaking fiat in this particular metric.
Canada is again behind their neighbours in second, with an ATM for every 16,000 people. With both Canada and the US gradually building out their regulatory framework for crypto, the popularity of both countries with miners and the overall standing of the two as financial centres, it is perhaps expected.
However, there is one country which presents an interesting case. Yes – it’s El Salvador. The Bitcoin-embracing country in Central America has 204 ATMs. In a country of only 6.5 million people, that equates to an ATM for every 31,800 people, good for third on the list. With Bitcoin announced as legal tender in September 2021, scarcely six months ago, it shows just how swift the country’s embrace of Bitcoin has been.
Finally, Switzerland are fifth – the same country in which the city of Lugano resides, who themselves announced the acceptance of Bitcoin as legal tender last month, in a bid to establish themselves as the Bitcoin capital of Europe. It will thus be interesting to see if Lugano can push Switzerland up the ranks of the below graph going forward.
Bitcoin ATMs per capita
Growth
When comparing to figures from 2018, we can see how ATMs have become significantly more prevalent. There are now 36,617 Bitcoin ATMs in the world, up from 3,150 in 2018. That equates to an increase of nearly 12X. Interestingly, at the time of the data, Bitcoin was trading at $7,500. The current $45,700 price means it has increased 6X in the same time frame.
The top two countries per capita – US and Canada – have seen growth in numbers of ATMs since 2018 of 17X and 4X respectively, showing Canada was a bit quicker off the ball, before their neighbours to the South caught up and surpassed them.
Meanwhile, the country in third, El Salvador, presents a case of its own. The government launched an initiative to install 200 ATMs alongside the launch of its digital wallet, called Chivo, as part of the legal tender bill. This means nearly all El Salvador’s ATMs were opened recently. Don’t be surprised if they continue to rise up the ranks.
Global crackdown on crypto ATMs, UK outright banning them
Earlier this month, the Financial Conduct Authority (FCA) in the UK sent letters to all Bitcoin ATM operators, with orders to immediately cease operations. The financial watchdog declared all ATMs as illegal, outlining in a statement that any owners refusing to shut them down will be punished.
There are 81 such Bitcoin ATMs in the UK, equating to one for every 830,000 people – which is actually curiously low in the context of the previous section when we analysed figures for other countries.
“We regularly warn consumers that crypto assets are unregulated and high-risk, which means people are very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them”, the statement read.
The FCA continued: “We have warned cryptocurrency ATM operators in the UK to shut down their machines or take enforcement action.”
“Crypto ATMs providing cryptoasset exchange services in the UK must be registered with us and comply with UK money laundering regulations. None of the cryptoasset companies registered with us are approved to offer crypto ATMs, meaning anyone operating in the UK is doing so illegally and consumers should not be using them.”
Money laundering through crypto ATMs
The ban in the UK is a stark reminder that Bitcoin ATMs still face a fight, alongside the entire crypto industry, to become fully regulated. The perception is, of course, that Bitcoin ATMs are perfect for money laundering. Without adequate background checks (KYC) of users, this is a thorn in the side of regulators. These checks are present, as we discussed earlier, at certain ATMs, but they are nowhere near as comprehensive as KYC checks seen elsewhere in finance, and can be easily circumvented. Moreover, they tend to exist only for large amounts.
The FCA has previously expressed concern about this, and the government agency’s website states that they are warning users and businesses. The British newspaper The Telegraph wrote earlier this week that the regulator had warned of the possibility of money laundering during a legal appeal by a Bitcoin ATM operator.
The fiat-to-crypto bridge is the key part of a transaction with regard to money laundering. Once in the crypto space, money can be moved around at will. While all Bitcoin ATMs facilitate cash deposits, some go beyond this and can actually be used to withdraw cash. This is even more of note for regulators, as money can anonymously be pulled off the blockchain into cold, hard, fiat cash.
Defenders of crypto often fight back against laundering accusations by noting that the blockchain actually offers transparency, meaning that while it is easy to shift money around, it is difficult to anonymously liquidate it into fiat. Bitcoin ATMs, however, can have a role here.
Conclusion
Bitcoin ATMs are an interesting quirk in the crypto space. The numbers show that, while they still obviously lag way behind fiat ATMs, they have grown substantially in the last number of years, in line with the rest of the industry. USA are dominant, possessing 87% of the world’s ATMS, while Canada are in second. El Salvador’s Bitcoin experiment means it is jogging behind in third.
But like most things in crypto, the legality can be murky, and regulation needs to catch up. UK have just outright banned the machines, and who knows what will happen in future. But as El Salvador have shown, ATMs are vital if Bitcoin wants to become an every-day medium of exchange.
With that medium of exchange dream seemingly far off in most other countries, however, the reality is that ATMs are not really that significant at this moment in time. I, for one, have been in crypto since 2017 and have never felt the need to use one. Sure, they are fun, and would probably be a nice bonus to have if you were ever in a pinch. But they’re far from essential, and the (relative) lack of mainstream anger at the banning of the machines in the UK shows this.
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