According to Cointelegraph, the crypto ATM business is flourishing in the United States, despite facing criticism for illegal or predatory behavior, as stated in a report by the Federal Reserve Bank of Kansas City. The report suggests that crypto ATMs have a growing customer base that could benefit from better education about cryptocurrencies.
Crypto ATMs convert Bitcoin (BTC) and other cryptocurrencies or stablecoins into or out of fiat currency. They are typically placed in high-traffic locations and charge a fee for their service. The average fee for using a crypto ATM is 15-16%, with operators sometimes setting unfavorable conversion rates, effectively driving fees up to 20% in many cases.
The report identified four user groups for crypto ATMs: cash users who may be unbanked, older individuals who find ATM technology more familiar than crypto exchanges, users motivated by the convenience of ATMs, and those seeking greater relative anonymity. Crypto ATMs require identification and are subject to state and federal regulation, including Anti-Money Laundering.
Minority groups and immigrants make up a significant user group for crypto ATMs, often using them for person-to-person transactions such as remittances. The crypto ATM industry has been accused of predatory inclusion, disguising high-risk, high-cost services as ways for the financially disadvantaged to gain entry to lucrative financial investments.
The report cited Chainalysis data showing that victims of scams moved $345 million through crypto ATMs in 2022, posing significant risks to the public. Despite these concerns, the industry is growing after a COVID-related downturn. Operator Bitcoin Depot went public in July and experienced a significant revenue increase.
