US Shutdowns Lead to Global Decline in Bitcoin ATMs

The cryptocurrency industry is no stranger to volatility, but recent developments in the United States(US) have profoundly impacted a specific segment of this market: Bitcoin ATMs.

These machines, which allow users to buy and sell BTC and other cryptocurrencies with cash, have seen a significant decline globally, primarily driven by regulatory challenges and economic shutdowns in the US. According to reports, the US and Canada account for 91.4% of the global BTC ATM network. The US hosts 31,089 machines, 82,6% of the total, while Canada has 2,909 machines, representing 7.7%.

Throughout 2024, countries worldwide played a significant role in the monthly rise in BTC ATMs, nearly bringing the total back to the 38,000 level lost in January 2023. Law enforcement agencies in the US often target and dismantle BTC ATMs that are frequently used for extortion and scams. Despite this, the exact reasons for the recent significant drop in their numbers still need to be determined. In 2024, Bitcoin Depot, the largest ATM operator in the US, reported consistent earnings.

Regulatory Landscape and Its Challenges

The US regulatory environment for cryptocurrencies has always been complex and fragmented, with different states imposing varying requirements. Over the past year, increased scrutiny from federal agencies, including the Securities and Exchange Commission (SEC) and the Financial Crimes Enforcement Network (FinCEN), has added layers of compliance for BTC ATM operators.

Many states have introduced stringent licensing requirements, which include high fees and extensive paperwork. For instance, New York’s BitLicense has been particularly restrictive, causing several operators to exit the market. The Anti-Money Laundering (AML) and Know-Your-Customer (KYC) requirements have become more rigorous, necessitating sophisticated technology and significant investment, which many smaller operators need help affording.

Economic Impact of US Shutdowns

The COVID-19 pandemic and subsequent economic shutdowns have further exacerbated the situation. With businesses closing and social distancing measures in place, the usage of Bitcoin ATMs declined sharply. This was compounded by the general economic downturn, which reduced disposable income and investment in cryptocurrencies. Shutdowns also affected the supply chain, making it difficult for operators to procure and maintain ATMs. The economic uncertainty also led to a conservative approach from investors, who became wary of funding ventures in such a volatile market. In its 10-K annual report filed on April 15 2024, the company noted that historically, there has been no correlation between its revenues and the price of BTC. Bitcoin Depot notes, “Based on our user surveys, a majority of our users use our products and services for non-speculative purposes, including money transfers, international remittances, and online purchase, among others.”

Decline in Numbers

As of early 2024, the number of BTC ATMs globally has dropped by approximately 20% from its peak in 2022. The US, which once housed nearly half of the world’s BTC ATMs, has declined steeply. Data from CoinATMRadar, a website that tracks BTC ATM locations, indicates that the number of operational machines in the US fell from over 30,000 in 2022 to just under 20,000 in early 2024.

The decline in US-based BTC ATMs has had a cascading effect globally. Countries that rely heavily on the US for financial technologies and services, such as Canada and parts of Europe, have seen a slowdown in the expansion of BTC ATM networks. Operators in these regions often depend on US-based suppliers and technological support, which the shutdowns and regulatory hurdles have disrupted. The US market is a barometer for global crypto regulation and adoption trends. The stringent measures and resulting decline in BTC ATMs have made other countries more cautious, leading to a slower rollout and stricter regulatory frameworks worldwide.

Adaptation and Future Prospects

Despite these challenges, the BTC ATM industry is showing signs of adaptation. Operators are exploring alternative strategies to survive and thrive. Some are shifting their focus to regions with more favourable regulatory environments, such as parts of Latin America and Southeast Asia, where crypto adoption is rising. In response to regulatory pressures, there’s a growing emphasis on compliance technology. Innovations in KYC and AML solutions are being developed to streamline processes and reduce costs. For example, blockchain-based identity verification systems are gaining traction, offering more efficient and secure ways to meet regulatory requirements. The industry is also diversifying its offerings. Many BTC ATMs now support multiple cryptocurrencies, not just BTC, and provide additional services such as bill payments and remittances. This diversification aims to attract a broader customer base and create additional revenue streams.

The decline in BTC ATMs significantly indicates the crypto industry’s broader challenges. Regulatory pressures and economic shutdowns in the US have led to a substantial reduction in the number of operational machines, impacting the global market. However, the industry’s resilience is evident in its efforts to adapt through technological innovation and market diversification. While the future remains uncertain, the adaptability of Bitcoin ATM operators and the continued interest in cryptocurrencies suggests that the industry could rebound as it navigates through these turbulent times.