The burgeoning crypto ATM industry in the United States has recorded healthy expansion despite concerns about illegal and predatory behavior, as per the Federal Reserve Bank of Kansas City report. Crypto ATMs, which transform cryptocurrencies like BTC and potentially other digital coins into or out of fiat money, are usually situated in high-traffic locales and levy a charge for their service.
Intriguingly, this fee for service has become a source of controversy, according to Franklin Noll, a KC Fed lead payments specialist who authored the report. The average fee for a crypto ATM is found to be 15-16%, but an unfavorable conversion rate could effectively elevate these fees up to 20%.
Crypto ATMs have found their niche, catering to cash users who are potentially unbanked, the elderly who view ATM technology as an easier alternative to crypto exchanges, and those who value the convenience and relative anonymity provided by ATMs. However, they require identification, placing them under state and federal regulations, including Anti-Money Laundering. Consequently, compliance with these regulations can be a significant overhead cost for operators.
Yet, there is a dark side. The crypto ATM industry has also been accused of predatory inclusion, disguising high-risk and incredibly costly services as means for financially disadvantaged individuals to enter profitable financial investments. This can lead to substantial losses for inexperienced crypto investors using these ATMs to buy volatile cryptocurrencies.
Furthermore, data from Chainalysis showed a huge sum of $345 million moved through crypto ATMs in 2022 by victims of scams. Such a revelation demonstrates the industry’s potential to facilitate scams and money laundering, posing a glaring risk to the public. However, amidst these concerns, crypto ATM operators like Bitcoin Depot saw significant revenue boosts after going public, indicating a marked resurgence post-COVID industry downturn.
Regulating the crypto ATM industry surely involves a grappling match between creating opportunities for underprivileged groups and curbing the risk of scams and excessive fees. A responsible balance must be struck between these polarities to genuinely nurture the growth of the industry while protecting the users.
Source: Cointelegraph
