Bitcoin Depot, a leading provider of physical Bitcoin ATMs and kiosks, has announced the successful conversion of all its 7,000 crypto ATMs to a software-based offering powered by BitAccess. The software conversion drive came after Bitcoin Depot acquired majority equity in BitAccess in November 2022. With this strategic move, Bitcoin Depot aims to increase its market share and reduce operational costs while addressing the declining trend in the crypto ATM market.
The decision to convert physical crypto ATMs to software-based offerings is a response to several challenges facing the industry. For one, geopolitical tensions and revenue decline have forced some ATM providers to shut down operations, reducing the overall number of crypto ATMs worldwide. Additionally, the high cost of annual software licensing fees has become a burden for ATM operators, especially in a market with decreasing demand.
By vertically integrating its hardware and software, Bitcoin Depot’s software-based offering eliminates the need for annual software licensing fees, which previously accounted for $3 million in annual operational costs. The software-based offering is expected to be more efficient and cost-effective, making it an attractive option for both ATM operators and customers.
Bitcoin Depot’s move to software-based offerings comes at a time when the market for crypto ATMs has seen a decline in installations since July 2022, according to data from Coin ATM Radar. The decline is likely due to several factors, including increased regulatory scrutiny, competition from online trading platforms, and the ongoing effects of the COVID-19 pandemic. Despite these challenges, Bitcoin Depot remains committed to expanding its reach and providing reliable, convenient, and secure access to cryptocurrencies.
In addition to its software conversion drive, Bitcoin Depot has also revealed plans to go public in 2023 via an $885 million deal with a special-purpose acquisition company. This move is expected to provide additional funding and support for the company’s growth and expansion efforts.
In conclusion, Bitcoin Depot’s conversion of its physical crypto ATMs to software-based offerings is a significant step towards reducing operational costs and increasing efficiency in the crypto ATM market. By vertically integrating its hardware and software, Bitcoin Depot is well-positioned to capitalize on the growing demand for cryptocurrencies and provide innovative solutions for ATM operators and customers alike.
Hong Kong, one of the most significant and leading financial centers in the world, has played a large role in the development of cryptocurrencies. For instance, the Chinese territory has birthed some of the most established and successful crypto companies to date including the crypto derivatives exchange FTX, along with the digital asset platform Crypto.com.
Yet, as trillions of dollars are traded regularly through crypto exchanges founded in Hong Kong, the “Vertical City” also contains an abundance of physical over-the-counter crypto shops as well. Henri Arslanian, PwC crypto lead and former chairman of the Fintech Association of Hong Kong, told Cointelegraph that the number of traditional OTC crypto brokers in Hong Kong certainly stands out. “These are literally brick and mortar stores for the retail public,” he said.
An anonymous source further told Cointelegraph that while traveling around Hong Kong, he couldn’t help but notice a huge rise in OTC crypto exchanges, some of which even provide access to cryptocurrency ATMs.
OTC retail stores make up Hong Kong’s crypto culture
Compared with regions like the United States or Europe where buying and selling cryptocurrency on regulated exchanges is fairly easy, Hong Kong’s physical crypto storefronts are a unique trademark that provides individuals with another way to access crypto.
Kelvin Yeung, CEO and founder of Hong Kong Digital Asset Exchange, or HKD.com, shed light on the matter. Yeung told Cointelegraph that the HKD.com crypto exchange was founded in 2019, the physical shop was established in January this year and that they employ over 30 staff members to provide customer service.
Yeung further remarked that HKD.com’s shop acts similarly to a traditional bank, giving customers the opportunity to gain a hands-on approach to buying crypto, along with access to in-person consulting services. As such, he believes that retail shops will most likely be a global trend moving forward as crypto becomes mainstream:
“As more investors and institutional investors get into the industry and digital currency becomes mainstream, there will be a tendency to open physical stores in combination with online platforms.”
Yeung added that he believes greater customer trust is built between HKD.com and its user base due to its physical presence. “Our users are primarily between the ages of 40 and 70. An older customer base is important for creating mainstream adoption since many of these people still hold fiat currency and only trust traditional financial systems,” he remarked.
Interestingly, it’s not just the older generation purchasing crypto at these physical locations. Priscilla Ng, founder of Coiner HK — another Hong Kong OTC retail exchange — told Cointelegraph that CoinerHK was launched at the beginning of 2020 to focus on the female market: “We wanted to create a market for women because we want to promote the idea that women could be financially independent and practice self investment.”
As such, Ng shared that CoinerHK’s customers are mainly women typically between 20 and 50 years of age and about 70% of them are trading in cash for crypto. Ng also noted that CoinerHK has two physical store locations in the golden area of Hong Kong.
Echoing Yeung, Ng added that having physical OTC exchanges can provide customers with greater opportunities: “We treat them as friends when trading and also give our customers faith in us since we own physical locations.” Ng further remarked that CoinerHK’s Wanchai location also serves as an art gallery that features nonfungible tokens (NFTs).
Regulations could push out physical OTC exchanges
While physical OTC crypto exchanges like HKD.com and CoinerHK appear to be providing greater access to crypto throughout Hong Kong, a number of regulatory risks are associated with these kinds of establishments.
For instance, Arslanian explained that in addition to regular customers, mainland Chinese tourists have been target clients for these establishments. He noted that many of these shops are located in touristic areas to attract users, but are particularly appealing to Chinese tourists due to the crypto ban in China: “One could assume that if mainland Chinese tourists visit Hong Kong, nothing will stop them from buying crypto at these OTC shops.”
With this in mind, Arslanian believes that there could be an increase in retail OTC centers in Hong Kong due to the influx of Chinese tourists interested in buying crypto. On the other hand, Arslanian mentioned that Hong Kong’s upcoming regulatory framework for crypto exchanges could cause these shops to shut down entirely.
As Cointelegraph previously reported, the Financial Services and the Treasury Bureau of Hong Kong have been considering restricting crypto access to portfolios with at least $1 million in assets. If passed, the new guidelines would restrict crypto access to roughly 93% of the city’s population.
Although this is a major challenge for physical OTC shops, Arslanian remarked that OTC stores may simply move their operations underground. However, he noted that this would then pose an increased risk to customers: “In case something goes wrong, the public is less likely to report them to the authorities.”
In regard to uncertain regulations, Yeung commented that the major challenge currently facing HKD.com is understanding if Hong Kong will soon only allow institutional investors to invest in crypto: “This will have a large influence on our business.” Arslanian added that regulated crypto exchanges not being able to service retail customers is something the crypto community greatly opposes since this could very well result in users turning to unregulated platforms.
Unfortunately, Arslanian further pointed out that it would be extremely challenging for physical OTC shops to receive the correct licenses, even if they attempt to be fully regulated. As of now, Yeung mentioned that HKD.com only requires a valid ID and address verification to buy and sell crypto on the exchange.
It’s interesting to see that currently, the only regulated crypto exchange in Hong Kong is OSL, which is also a unit of the Fidelity-backed BC group. OSL managing director and head of exchange Andrew Walton explained to Cointelegraph that OSL was purposefully built with regulations in mind, and even practiced self-regulation before some of the current laws were enacted.
In addition, Walton shared that OSL was grandfathered in under Singapore’s Payment Services Act, or PSA, and has additionally applied for a digital payment token, or DPT, license through the Monetary Authority of Singapore. Impressive regulatory approvals recently allowed OSL to expand its business to Latin America. “In Latin America, the OSL Exchange product will be initially available to institutional and professional investors in the region, in Mexico, Colombia and Argentina. OSL’s LatAm offering will also seek appropriate licensing as regulatory developments across the region take place,” Walton added.
Retail investors are needed from a business perspective
While OSL’s efforts are indeed notable, Arslanian pointed out that a lot of revenue is typically generated from retail clients buying and selling crypto on exchanges and the retail flow, in turn, attracts institutional clients. As such, he noted that Hong Kong’s willingness to force crypto exchanges to cater only to institutional investors is a hard ask from a business perspective. Although this may be, Walton remarked that OSL has seen a significant increase in interest from the institutional segment over the past year.
Given the continuing regulatory uncertainty for cryptocurrency, Arslanian mentioned that Hong Kong may very well be best suited for institutional investors, while Singapore could be more logical for retail customers.
The largest Bitcoin ATM operator in the world has said it will be expanding into Circle K locations in the United States and Canada.
Bitcoin Depot announced today that more than 700 of its Bitcoin ATM machines had already been installed at Circle K convenience stores in 30 U.S. states as part of the new partnership. The crypto ATM distributer said the expansion could provide underserved communities with financial access tools and attract more people to the crypto space.
“Over the last year, we have watched cryptocurrency gain mainstream adoption by wealth managers and investment firms, but what about the people that don’t have access to those services?” Bitcoin Depot’s director of product Alona Lubovnaya told Cointelegraph. “ATMs being located in Circle K’s provide an easy onramp for the underbanked and less affluent, not just someone with a wealth manager.”
The company claims to have more than 3,500 crypto ATMs in operation across the U.S. and Canada allowing customers to purchase more than 30 different types of cryptocurrencies including Bitcoin (BTC), Litecoin (LTC), and Ether (ETH). Alimentation Couche-Tard, the Canada-based operator of Circle K, reports that its brand operates roughly 7,150 stores in the U.S. and 2,111 in Canada.
Bitcoin Depot announced last year that it was suspending service to certain machines in areas at high risk during the ongoing pandemic. The company has since reported that it has restored service to all locations, despite the recent rise in COVID-19 cases and deaths in the United States.
Related:The number of Bitcoin ATMs in the US rose 177% over the past year
The number of crypto ATMs across the globe allowing customers to exchange fiat for crypto has grown significantly in recent years. At the time of publication, data from CoinATMRadar shows there are roughly 24,000 crypto ATMs in 75 countries, from Kazakhstan to Australia. The majority — more than 20,000 — are in the United States.
“Our mission is to Bring Crypto to the Masses,” said Lubovnaya. “We will continue to do this with significant partner expansions going forward.”
Crypto adoption among mainstream payment service companies continues to grow with MoneyGram set to join the list.
In a release issued on Wednesday, the global payment service announced a partnership with crypto exchange and Bitcoin (BTC) ATM operator Coinme Inc., to allow U.S. customers to withdraw their cryptocurrency holdings for cash across its point-of-sale outlets in the country.
As part of the announcement, MoneyGram also revealed that customers will be able to buy BTC and crypto in an expansion of the existing crypto-to-cash model pioneered by the almost 20,000 cryptocurrency ATMs around the world.
Commenting on the development, MoneyGram CEO Alex Holmes remarked:
“This innovative partnership opens our business to an entirely new customer segment as we are the first to pioneer a crypto-to-cash model by building a bridge with Coinme to connect bitcoin to local fiat currency.”
For MoneyGram, the ability to buy Bitcoin across its brick-and-mortar retail outlets might be a significant development for would-be first-time crypto users daunted by interacting with online cryptocurrency exchanges.
MoneyGram’s announcement also likely offers another indication of the potential for a unified money transmission licensing regime, especially for cryptocurrencies.
Back in September 2020, 48 U.S. states agreed to establish a single regulatory framework for money transmitters — a move with significant implications for 78 fintech businesses like MoneyGram with an annual turnover above $1 trillion.
MoneyGram debuting physical Bitcoin buying across its locations in the U.S. is also another example of fintech and payment service firms warming up to cryptocurrencies. From stables like PayPal to Visa and MasterCard, debuting some form of crypto-related feature is becoming a norm across the industry.
Back in March, PayPal began allowing U.S. customers to pay with Bitcoin across millions of online merchants on the platform. In April, PayPal CEO Dan Schulman said the company’s crypto commerce was on course to reach $200 million in a few months.
The total number of Bitcoin ATMs increased by over a thousand worldwide as operators expanded their inventory mostly in the US. The news offers yet another indication of the growing appeal of the crypto industry around the world. US Bitcoin ATM Count Now Above 10,000 According to its latest Market Dynamics report published on Dec.
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