Bitcoin ATMs 7 years: from 0 to 10000

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Bitcoin ATMs installations exceeded 10’000 locations across the globe. It took industry roughly 7 years to reach this point since the first permanent bitcoin ATM installation in the end of 2013 (there is still a bitcoin ATM at this location in Vancouver at Waves Coffee House). Looking back at traditional bank ATMs, it took banks 9 years to install 10’000 ATMs, so the pace of bitcoin ATM installations is quicker than for bank ATMs back in the 70-s.

Interesting fact: After the first 3.5 years there were 1000 active bitcoin ATMs in operation, over the next 3.5 years this figure has increased by 9000 ATMs more.

It is a large milestone and achievement for all involved companies and people. We would like to congratulate all members of the community, entrepreneurs involved in operation of ATMs and supply of hardware and software, companies that provide compliance and other complimentary services helping to grow the business. We use this milestone as a chance to look back and check how running bitcoin ATMs became a professional business and evolved over these years.

Bitcoin ATMs – first days

As Bitcoin was growing in popularity in early days and it was still not an easy process to acquire coins, people started thinking about how to make it easy for an ordinary public. This is when bitcoin ATMs became an idea, as ATM is something people are already familiar with and acquiring coins in exchange for cash was an interesting and immediate approach.

Several companies were working on ATM prototypes back in 2013 and presenting their solutions to the public. Lamassu was one of the first companies demonstrating their prototype machine at NH Liberty Forum in May 2013.

Other companies were also working on developing bitcoin ATMs. And soon there appeared permanent locations where ATMs were installed. In October 2013 Robocoin (a popular bitcoin ATM supplier in 2013-2014) had their first ATM installed in Canada. Soon after installations in Canada, the first ATM was installed in the U.S. It was a Lamassu machine installed in February 2014 in Albuquerque, New Mexico. Since mid 2014 the installation speed accelerated.

Bitcoin ATM growth: https://coinatmradar.com/charts/growth/

By the end of 2015 there were more than 300 ATMs installed worldwide. Back then the ATMs were still installed mostly by hobbyists who wanted to support cryptocurrency adoption. Checking statistics of bitcoin ATM installations from the mid 2014 we see that Lamassu machines dominated the market, followed by Robocoin installations. Both current largest ATM suppliers Genesis Coin and General Bytes had their first live bitcoin ATM installation as well in the first half of 2014: Genesis Coin had their first Genesis 1 model installed at Tijuana’s Bit Center in Mexico (March 2014) and General Bytes had their compact BATM2 model installed at brmlab Hackerspace in Prague in May 2014.

First General Bytes ATM at brmlab Hackerspace (2014)

So starting from the beginning the manufacturers were represented by many companies. There were also installations from Canadian-based producer Bitaccess, who is still supplying kiosks and provides software for one of the largest operators Coincloud, and small factor Skyhook machines, which were later abandoned by the market due to lack of support from the company.

The following chart from September 2014 illustrates the shares of different ATM types:

Share of bitcoin ATM by Manufacturer, September 2014
(source: https://coinatmradar.com/blog/bitcoin-atm-statistics-september-2014/)

Robocoin and Skyhook later abandoned the market, the former for taking wrong decisions by the company’s management, the latter for being not a profitable model to grow the business. In the end of 2015 there were four major bitcoin ATM suppliers: Genesis Coin and Lamassu with 25% marker share each, Bitaccess (13%) and General Bytes (12%).

All these companies are present on the market today with changed leadership. The two largest bitcoin ATM providers today are Genesis Coin (35%) and General Bytes (30%) followed by Bitaccess, Coinsource and Lamassu:

Bitcoin ATM installations by Manufacturer, September 2020 (source: https://coinatmradar.com/charts/manufacturer-share/)

Cryptocurrencies support at ATMs

In the early days most of the ATMs were supporting solely bitcoin. This can be confirmed by revisiting altcoins support in September 2014, when the absolute majority of ATMs were bitcoin only. The next largest supported cryptocurrency with only ~4% was Litecoin. Other coins had even smaller adoption among operators.

Cryptocurrencies supplied at ATMs (September 2014)

This trend of bitcoin dominance at ATMs continued until the beginning of 2017 and then changed into increased number of other cryptocurrencies supported as well. Mostly the reason was congested bitcoin network, and as a result high miner fees and long confirmation times. This resulted in worse UX when transactions started getting stuck and users of ATMs needed to reach support to get it resolved. In December 2017 bitcoin network fees reached tens of dollars per transaction and at this time many users already moved to other cryptocurrencies and operators followed users by providing new set of cryptocurrencies at their ATMs. The following chart shows what share of all Bitcoin ATMs supported at least one other cryptocurrency over time:

Share of ATMs supporting other coins than Bitcoin
(source: Monthly Market Dynamics posts in our blog)

It is seen that altcoins were added at ATMs by operators mostly since the 1st quarter of 2017 (previously, Bitcoin was the only available cryptocurrency at about 98% of all ATMs). The share of other cryptocurrencies grew steadily up to ~70% where it stabilized and stays the same for almost 2 years since the beginning of 2019. Around 30% of all ATMs still support only Bitcoin transactions.

As of today the common list of supported cryptocurrencies and ATM shares supporting them are displayed on the following chart:

Cryptocurrencies Supported at ATMs, September 2020
(source: https://coinatmradar.com/charts/cryptocurrency-share/)

Hobbists vs. Professional operators

Initially, operating of ATMs was mostly done by individuals or small scale companies. The industry itself was fresh and new and many companies learned by doing and also grew over time. Many of the largest operators today started bitcoin ATM operation business in 2015 or later.

One of the 2015 year trends was the concentration of business. The largest companies had 15-25 machines back then. Later over years this trend only became stronger and in the recent 2019-2020 years the operators were acquiring and merging many existing smaller businesses. The largest operator companies in the U.S. today have 900-1000 ATMs each:

Number of ATM installations by operators, September 2020 (source: https://coinatmradar.com/charts/top-operators/)

Geographical distribution

Back in 2014 United States of America and Canada were already leading the most installations, however, their share was much smaller than today.

Bitcoin ATM share by country, September 2014
(source: https://coinatmradar.com/blog/bitcoin-atm-statistics-september-2014/)

North America had less than 50% on the world’s market. This share continued to grow over time, and in the end of 2015 it reached 55%:

Bitcoin ATM share by continent, October 2015
(source: https://coinatmradar.com/blog/bitcoin-atms-industry-overview-after-2-years-since-first-launch/)

In the end of 2016 it was already a 73% share. Today North America’s share of bitcoin ATM installations reached 85% and 76% of all bitcoin ATMs in the world are installed in the U.S.:

Bitcoin ATMs by country and continent, September 2020
(source: https://coinatmradar.com/charts/geo-distribution/)

Regulation and KYC rules

Regulatory requirements is another aspect that changed and evolved over years. The bitcoin ATM industry was born in the early days of cryptocurrency existence and laws still didn’t have very clear definitions and requirements for conducting such a business. Mostly operators were taking existing laws and trying to apply this to the new business model.

Since then regulators in many countries have provided guidelines as to what is required to operate a bitcoin ATM business. On one side, the requirements were made more transparent, however, they were made much stricter as they were initially. The following are several examples of regulatory framework changes.

BitLicense (New York)

BitLicense is a cryptocurrency regulatory directive introduced in mid 2015 and applied to businesses in New York. The regulation was strict and required to apply for a license to run a business in NY. Many complained that regulation was more strict than even for existing financial institutions. As a result many cryptocurrency businesses abandoned NY and closed their business for NY residents. Among bitcoin ATM operators only 2 companies now have BitLicense approved — Coinsource and Cottonwood Vending. It took Coinsource 3 years since application to receive a license in 2018. After 5 years of BitLicense existence only 25 companies were approved. The absurdity of this situation goes further, as the superintendent Benjamin Lawsky who was the mastermind and mostly created the BitLicense, left Department of Financial Services in the same year when BitLicense went into force (2015) in order to create his own consultant company to help receive the BitLicense. Later in 2018 Benjamin Lawsky joins New York Digital Investment Group Asset Advisory LLC (NYDIG) and after 1 year the company receives a license.

Regulation in Canada

Since 01 June 2020 the new regulation was put in force, which requires bitcoin ATM operators to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and comply with the requirements of this regulatory body. Many operators in Canada, already had KYC rules applied, but this regulatory change requires them to register as an MSB and regulates customer identification and requires more reporting.

Regulation in Europe (AMLD5)

AMLD5 is the latest AML regulatory initiative that applied in the European Union starting beginning of 2020. It made operating a bitcoin ATM business much harder as it requires full identification of the users. With introduction of this directive and applying it in various EU countries, the non-verified limits were reduced to amounts like 200 EUR. And as operators can’t restrict the same user to reuse ATM again, usually such limits are applied for the whole ATM for some period of time, e.g. for a day. This means other users can’t conduct transactions at the same machine if someone already used it on the same day without verification. Some countries went even further with application of AMLD5 at the national level and introduced more stricter rules, when users need to do full KYC (incl. identity documents) for absolutely all transactions (The Netherlands). One of the advantages of using ATM and the reason users were ready to pay relatively high transaction fees, was the privacy component as payments with cash are not connected to your identity. With removal of an option to exchange funds without verification, the volumes significantly dropped as reported by operators. And this also resulted in a removal of ATMs and impeding of business expansion by European operators. We covered this case in the comparison of US and EU bitcoin ATM markets and it is clearly demonstrated on the following charts of comparing the U.S. installations number and similar metric in EU:

A good example of a regulatory representation in EU is a regulatory situation in Germany. Germany is the largest country in EU and has the most demand among cryptocurrency users (as per traffic on our website). Bafin, a local financial regulator, recently closed activity of several bitcoin ATM operators. In order to operate a bitcoin ATM they require a company to receive a license, which is similar to receiving a bank-grade license (e.g. it is required to have a manager with several years of experience in the financial area) and with similar costs as it will require a capital of at least 730 thousands EUR. If banking license is required it will cost millions of EUR. This obviously eliminates any opportunity for small enterprises to enter the market (this is how it normally happened on other markets – operators started small and grew fast). This is a reason Germany is still a black spot on the bitcoin ATM map. German regulator goes even further and plans to punish businesses that provide facilities to install ATMs, which sounds like a nonsense, as those are definitely out of scope of activity that Bafin regulates.

Self regulation

Imposed regulation is only one aspect, as many operators often apply even more stricter rules than required by the law. The reason lies in banking relationships. The key factor to success of such a business is an access to financial operations. The normal flow of funds is illustrated on the following chart:

Money flow for bitcoin ATM operation
(source: https://coinatmradar.com/blog/risks-of-running-a-bitcoin-atm-business/)

In order to have ability to convert cash to cryptocurrency, operators need to have a bank account and ability to deposit funds, which are later wired to cryptocurrency exchanges. It became very hard to find a crypto friendly bank, that will serve bitcoin ATMs, as they are a cash-based business and banks treat such businesses as a very high risk. In order to reduce the risks for the bank and make compliance team happy, operators usually impose strict compliance programs that require identification of the users from very small transaction amounts. This is a trend that was happening over years, and, for example, it is hard to find a large bitcoin ATM operator in the U.S. that applies no-verification rules even for small amounts. At least phone verification is required, and usually burn-phone numbers are not accepted. Smaller-sized operators still apply more relaxed rules, but sometimes they operate business without access to bank services, e.g. readjusting buy and sell fees to balance the liquidity they have.

Here is a list of top operators in the U.S., according to the number of ATMs, and their KYC rules applied as per information on our website:

Operator Name Number of ATMs KYC rules
CoinCloud 952 $1 – 2000 lifetime – any valid phone number
$2999 per transaction up to $10000 daily after scanning ID
$10000 – email at support to request higher daily limits
Coinflip 900 $5 – 900 SMS verification & Name Entry
$905 – 2995 ID registration
$3000 – 8000 SSN & enhanced verification (call us)
$8005 – 12000 Preferred Client Registration & Secondary ID verify (call us)
Bitcoin Depot 880 $0 – $250 is SMS, name, and phone number verification
$251 – $2,999 ID verification
$3,000 – $10,000 Photo ID and SSN verification
RockitCoin 517 $0 – 750 SMS verification and pin
$751 – 2999 ID scan verification
$3000 – 9000 ID scan verification, DOB, SSN, photo of ID
KYC rules by U.S. top bitcoin ATM operators, September 2020

As seen from the table, none of the large operators support any non-KYC transactions.

International Expansion

Another trend occurring over last years is an international expansion of operators activity. Some grew to the extent when they were ready to move out of their national borders. There might be different reasons incl.:

  • exploring new markets, e.g the ones from major remittance corridors as there might be a natural demand for such machines;
  • diversification of business activities and diversification of risks;
  • avoiding competition, e.g. US market is the largest with respect to a number of operators, reaching other markets might give competitive advantage due to lack of service providers.

The list of operators that currently operate in several countries and have more than 10 ATM locations in total:

ATM Operator Name Total ATMs Origin Country Current Countries of Operation
Bitcoin Depot 880 USA USA (883), Canada (5)
Localcoin 207 Canada Canada (182), USA (25)
GetCoins 159 USA USA (152), UK (7)
Athena Bitcoin 153 USA Argentina (11), Colombia (17), El Salvador (1), USA (124)
Kurant 137 Austria Austria (101), Greece (30), Italy (1), Spain (5)
Shitcoins Club 101 Poland Poland (28), Belgium (7), Estonia (3), France (8), Italy (12), Lithuania (1), Netherlands (9), Romania (14), Spain (19)
Värdex Suisse SA 45 Switzerland Switzerland (43), Liechtenstein (2)
CoinHere 34 Hong Kong Hong Kong (28), Taiwan (3), Thailand (1)
Bitcoiniacs 32 Canada Canada (31), Philippines (1)
Cryptomat 29 Georgia Georgia (26), Ukraine (3)
BITCOINMAT.sk 27 Slovakia Slovakia (15), Czech Republic (11), Greece (1)
The Sun Financial Technology Co.Ltd 27 UK Belgium (4), Greece (5), Hungary (1), Ireland (5), Italy (2), Poland (1), UK (9)
WBTCB 26 Czech Republic Czech Republic (18), Slovakia (8)
Byelex Data Solutions B.V. 19 Netherlands Belgium (6), Netherlands (13)
GENERAL BYTES SERVICES s.r.o. 18 Czech Republic Czech Republic (17), Slovakia (1)
Bcash 17 Greece Greece (15), Poland (1), Russian Federation (1)
C-Novation 17 Germany Belgium (2), Netherlands (9), Slovakia (5), Spain (1), Czech Republic
Bitcoin ATM Operators Present on Several National Markets, September 2020

From the table above it is clearly seen two main cases for operators to expand cross border. First and most frequent is the case when operator, located in EU, expands to the neighbor countries in EU as well. Main reason is probably EU’s rule of free movement of services. If you have a registered business providing services in the EU country, you can offer similar services in another EU country without setting up a company or branch there. However, this doesn’t apply similarly in all countries, and exclusion might be applied to financial services, which is the case in Germany, where additional requirements are imposed by local regulator, although the Germany being a heart of the EU.

Another case when operators expand internationally is mostly the companies in North America entering other markets. It is seen that those companies were already large scale businesses, before they started expansion. Most prominent example is probably Athena Bitcoin, a US-based operator, who installed ATMs in Latin America. Other example is Localcoin a Canada-based company expanded their business to the U.S. market as well.

We expect this trend to continue and with saturation of local markets, expanding to other countries will be a logical next step for many large operators.

Summary

Bitcoin ATM market exists for 7 years, over this time the total number of worldwide installations grew to 10’000 locations and the speed of installations accelerates further. Many large companies built multi-million businesses operating ATMs and covering the demand from users on the new evolving market. The suppliers of ATMs is concentrated in the hands of 4-5 companies with large dominance of the two providers – Genesis Coin (mostly U.S. market) and General Bytes (pretty much all the other geographical markets).

Over 7 years the industry matured and is led by professional businesses instead of amateur operators. The largest market is concentrated in the North America (85% of installations). Main trends over last year were more stricter regulation which almost eliminated the non-KYC option to buy or sell bitcoins at ATMs and expansion of operators business to external than national markets.

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