Government regulators have quietly banned Bitcoin ATMs. An entire subsection of the Bitcoin ecosystem was deemed illegal and shut down. Since there isn’t much crossover between people who are chronically online and cash buyers of Bitcoin, it doesn’t get much attention. But the Bitcoin ATM ecosystem represents $3.63 billionwith B dollars coming into Bitcoin every year, and that’s only in the United States.
Beyond financial matters, Bitcoin ATMs are essential for maintaining self-sovereignty in the system. Bitcoin ATMs allow you to do something that no other service in the financial industry can do: they allow you to get cash, without a bank account, without a credit check, without a cash account, and walk out with bitcoin in a wallet that only you control.
Perhaps this is the self-sovereignty that regulators do not like. Unfortunately, they blame the bogeyman, fraud.
A blanket ban has already been enacted, making Bitcoin ATMs illegal Indiana, Tennessee and Minnesota. A de facto ban also exists, creating limits that make it impossible to operate at any net profit in California, South Dakota, Wisconsin and Virginia.
Of course, all bans and regulations are done under the guise of “consumer protection”, but legislation does not stop fraud. the A series of frauds It’s easy to track, and Bitcoin ATM operators are doing just that, joining forces to form an alliance and fight back.
There is no other industry under more intense scrutiny than fully licensed MSBs (financial services businesses) that hold MTLs (money transmission licenses) operating a cash business subject to FinCEN’s AML KYC regulations.
The fraud argument is selectively applied to Bitcoin ATMs because it is politically easy. He was also arrested in goal From the association’s operating budget of two billion dollars. But the facts don’t support the narrative. And throughout the broader financial industry, the standard rate of fraud falls somewhere in between 3 – 5%. It’s just 1.2% In Bitcoin ATM. In other words, 98.8% Bitcoin ATM transactions are legitimate.
Why doesn’t the US ban Western Union or Visa gift cards? Or robocalls, for that matter?
The average Bitcoin ATM transaction is $300; 80% of all transactions are less than $1000. The average ATM customer is someone who puts $50, $100, or $500 at a time into an asset, in the same way someone DCAs on the stock exchange. The average repeat purchase is every 24 days, and the average lifetime spend per customer is $12,000. According to the Federal Reserve’s own research, the primary users of Bitcoin ATMs are the 24.6 million unbanked and underbanked Americans who are “disproportionately black, Latino, immigrant, rural, and low-income.” They transfer $20 to $100 at the gas station because they don’t have a bank account. States do not prohibit speculative instruments. They block legitimate financial access to people who already have the fewest options.
The “scam” is just a Trojan horse. The ban will not stop at ATMs. “The canary in the coal mine” is a metaphor for an early warning sign of impending danger or failure. As the president tries to claim that the United States is the “Bitcoin capital of the world,” his Justice Department has put the industry’s developers in their place. prison. Another trend we cannot allow.
For Bitcoin to succeed, we need all parts of the Bitcoin ecosystem to thrive. Likewise, for the industry to flourish here in the United States, we need the United States to maintain its rights.
If the ban is allowed to continue, it won’t just stop at ATMs. This is a test case of the “block first, never ask questions” principle. Both the current and previous administrations have proposed a series of bills that would similarly ban other parts of the ecosystem, infringing on the rights of almost everyone who interacts with the Bitcoin network in one way or another.
A short list of some of the bills that are just around the corner:
S.5267 – Digital Assets Anti-Money Laundering Act of 2022: Wallet providers, miners, validators and others are explicitly named as MSBs (triggering KYC/AML).
S.2669 – Digital Assets Anti-Money Laundering Act of 2023: Reintroduces the same general approach in treating digital asset providers/facilitators as financial institutions for the BSA. S.2355 – CANSEE Act: Targets DeFi facilitators/supporters and seeks to apply AML/sanctions obligations to DeFi-style activity.
S.3867 — Digital Asset Sanctions Compliance Enhancement Act: Target Transaction Facilitators and Blocking Platforms Related to Sanctions.
HR3684 – Infrastructure Act: which was enacted and sparked debate over the definition of “exchanges and brokers” that initially included miners, node operators, and software developers despite the fact that the required reporting was technically impossible. Ultimately, the Treasury Department and the IRS narrowed their scope before implementing the bill. But how many people in the industry knew how close this was to becoming law?
We cannot allow them to define self-custodial wallets as “money laundering tools,” P2P exchanges as “unlicensed money transfer,” Lightning nodes as “unregulated payment processing,” or Bitcoin ATMs as “fraudulent activity.”
The whole promise of Bitcoin is that no one can stop you from holding and handling your own money. The Bitcoin ATM is where this promise meets physical reality. Anyone with cash and a mobile phone can participate in a global censorship-resistant financial network without asking anyone for permission.
Let’s keep it that way.
If the state is able to abolish the only way to move from cash to self-custody, then the right to self-custody becomes theoretical. It only exists for people who already have bank and exchange accounts
Relationships, i.e. people who already have permission. Bitcoin ATM is Canary. If he dies and no one notices, the coal mine is next.
This is a guest post by Michelle Weekley. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
