Bitcoin ATM Profile on the Rise with BlockFi
David Olsson, managing director for Europe and Asia at BlockFi, spoke with Teana Baker-Taylor about bitcoin ATMs and the geopolitical scene on the heels of the U.S. presidential election. Olsson said that BlockFi believes the election is good for crypto whichever way it goes. It…
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David Olsson, managing director for Europe and Asia at BlockFi, spoke with Teana Baker-Taylor about bitcoin ATMs and the geopolitical scene on the heels of the U.S. presidential election. Olsson said that BlockFi believes the election is good for crypto whichever way it goes. It is positive, he explained, because the U.S. government still needs to spend a lot of money, central banks still need to print a lot of money to get the economy out of the COVID crisis.
(1:09) “So crypto is going to benefit from that, obviously, and especially bitcoin,” he said.
On the lending front, Olsson explained that the DeFi craze has “settled down a bit,” adding that a bit of normalcy has returned to the markets. ETH borrow rates skyrocketed over the past several months over dollar-lending rates, which is significant and the market hadn’t seen before.
(1:35) “People scrambling to get ETH from whatever corner, back of the sofa that they could. And now we’re seeing that trade unwind and wondering what will be the next thing in terms of dollar rates,” said Olsson.
The profile for bitcoin ATMs, meanwhile, is on the rise. Olsson compared a traditional ATM with that of bitcoin, saying that an ATM or cash-point in the UK is where people go to withdraw fiat currency, while a bitcoin ATM on the other hand is where someone goes to purchase bitcoin. There are also some kiosks that let users sell BTC online and withdraw fiat. Bitcoin ATMs are also expanding to support cryptocurrencies.
BlockFi’s Olsson described how bitcoin ATMs work. At first, users are presented with a few options:
- Get Cash
- Choose an eGift card
- Donate to charity
- Buy bitcoin
When you select “buy bitcoin,” you’re taken to a disclaimer page, which include terms such as the quantity of funds users can deposit in a day and the use of AML/KYC procedures. Next, the user inserts fiat currency into the machine, and the machine prints out a receipt with a code on it. The user then takes the receipt home, logs into a website that is on the receipt, punches in a code, goes through the AML/KYC procedures and finally receives their bitcoin into a wallet.
The bitcoin arrives minus any fees that are taken out, which could range between 3-10%.
The KYC procedures that bitcoin ATMs have implemented are somewhat new. In the United States, bitcoin ATMs are regulated as money services businesses, and therefore must have Fincen regulation. In the UK, the FCA has said that all companies dealing in crypto or virtual currencies need to register with them, which has thrown some bitcoin ATM operators for a loop as they struggle to get the infrastructure together to allow people to continue to use the machines, Olsson explained.
BlockFi has created a heat map that identifies the locations where bitcoin ATMs can be found.
Bitcoin ATMs are predominantly located in the United States. Of nearly 10,000 machines in North America, 9,300 are located in the United States. There are a few hundred of them in the UK, mostly in London.
(6:45) “The most famous one used to be on Bond Street, which just spontaneously started spitting out pound notes a couple of years back and has since been removed. “But they’re growing in number. And we’re seeing just the numbers of bitcoin ATMs and cash points explode in the US and in Europe,” said Olsson.
The target market for bitcoin ATMs includes adventure seekers who are looking for novelty and buying their first bitcoin. The vast majority, however, are people who are looking to remit funds back to their countries, which are probably in developing markets where local currencies are probably not as stable and may have deflation vs. the USD, GBP or BTC, Olsson explained.
(10:29) “So they’re using it as a way to securely send money back home without having to jump through hoops in terms of capital controls, which a lot of these countries would have. As well, they probably get a higher rate. What we’ve heard is there’s a higher rate changing from cryptocurrency like bitcoin to local currency then if they went through regulated channels and sending fiat like dollars and then converting into local currency. It’s less expensive because the exchange rates for changing from cryptocurrency to local currency are better, more in favor of the retail user.”
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