Author: Richard Henderson, Suvashree Ghosh, Bloomberg; Translated by: Wuzhu, Golden Finance

Bitcoin ATMs are flooding into Australia, making the country the fastest-growing market for self-service cash machines and raising questions about the source of demand for the controversial service.

Users of such ATMs can enter cash to receive cryptocurrency in a digital wallet, or receive physical tickets from token sales. The United States accounts for the vast majority of the market, with about 32,000 machines, followed by Canada with about 3,000, according to data collated by Coin ATM Radar.

Australia is third, with nearly 1,200 machines, up from 73 two years ago, and more are on the way. In an August call with analysts, Brandon Mintz, CEO of U.S.-based Bitcoin Depot Inc., said the company has more than 200 ATMs in Australia awaiting regulatory approval.

Data from Coin ATM Radar shows that Australia has recently led the world in growth. Operators believe that ATMs promote financial inclusion by providing easy access to cryptocurrencies. Critics point out that ATMs pose risks such as money laundering and scams that deceive users and cause losses. Countries such as the United Kingdom and Singapore have banned ATMs, while Germany is cracking down on them.

North American suppliers spur Australian ATM growth

Angela Ang, senior policy advisor at blockchain intelligence firm TRM Labs, said North American vendors seeking to expand have spurred the growth of kiosks in Australia, and most operators have implemented some compliance controls. Still, Australian authorities have “identified crypto ATMs as a money laundering vulnerability,” she said.

Police outlined the money laundering process in a statement last year: Illegal cash is placed into an ATM in exchange for digital assets, which are then traded through multiple transactions until it becomes almost impossible to trace its origin.

According to TRM, crypto kiosks dominate the cash-to-cryptocurrency industry, which has processed at least $160 million in illicit transactions worldwide since 2019. Consulting firm Chainalysis Inc. estimates that illicit digital asset activity across Australia was about $223 million from 2022 to 2023.

ATMs account for only a small portion of global transactions in the cryptocurrency market, which is worth more than $2 trillion. In Australia, any digital currency exchange provider must register with the Australian Transaction Reports and Analysis Centre (Austrac).

Australia is seeing a boom in cryptocurrency ATMs

Gambling Culture

In response to questions about the risks of crypto ATMs, an ATO spokesperson said combating technology crime is a key focus area for the Serious Financial Crime Taskforce, which is led by the ATO.

Another mystery is the deep-rooted gambling culture in this country of 27 million people, which has the highest per capita legal gambling losses in the world, according to estimates by the country’s Institute for Health and Welfare. The love of gambling has spread to bets on volatile cryptocurrencies, some of which have surged in the past year.

Meanwhile, local banks have restricted their ability to transact with digital asset exchanges, making it harder for some banks to trade cryptocurrencies. Commonwealth Bank of Australia, National Australia Bank, Australia and New Zealand Banking Group Ltd and Westpac Banking Corp have all imposed restrictions due to concerns about scams.

Caroline Bowler, CEO of digital asset exchange BTC Markets Pty, said the restrictions have prompted more local cryptocurrency users to seek “alternative financial platforms,” including overseas ones. She added that new entrant CoinFlip is driving the increase in kiosks in the country.

"Parallel" system

Chicago-based CoinFlip said the value of digital asset transactions through its ATMs in Australia has more than quadrupled in the past year. CEO Ben Weiss said that given that cryptocurrency is a “parallel financial system to the fiat currency system, it makes sense to have a physical component to access cash.”

Weiss said CoinFlip charges commissions of 6% to 14% in Australia, lower than the 6% to 18% in the U.S. Earlier this year, the company launched a trading desk in Australia for customers who want to make large trades in cryptocurrencies.

Bitcoin Depot’s Mintz compared it to the U.S. state of Texas, which has about the same population as Australia but has about 3,000 to 4,000 bitcoin ATMs, during a conference call with analysts. “The bitcoin ATM market in Australia has the potential to grow by thousands of units over the next few years,” he said.