Are Bitcoin ATMs legal? Las Vegas company will take a flyer on gray-area regulatory question
Despite the popular success of Bitcoin, dubious U.S. regulators worried about possible money-laundering have put the brakes on efforts to make the virtual global currency more widely available.
The federal investigation of Bitcoin exchange operators who authorities say provided funds for anonymous drug purchases on the now-shuttered Silk Road website, as well as cumbersome financial regulations that do not provide a clear path to compliance with banking regulations have discouraged entrepreneurs from leaping into plans to set up Bitcoin ATMs. But now, a Las Vegas-based company, Robocoin, says it is going to set up Bitcoin ATMs in Seattle and Austin, Texas, before the end of the month, according to Reuters and a Wired article published last year.
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The machines will be the first Bitcoin ATMs in the U.S., Reuters reports, although Robocoin already has one in Vancouver, British Columbia, and plans to install others in Europe and Asia. The American machines will confirm customers’ identities by requiring a driver’s license or passport and then allow users to sell bitcoins for cash or purchase bitcoins on the spot using their smartphones—and paying a transaction fee. Bitcoin is publicly traded, but its value has varied considerably in recent years. Right now, a single bitcoin is worth about $636. In December, its value was nearly $1,000. The machines reportedly will sell fractional amounts, if desired.
The crypto-currency is essentially backed by users’ agreement that is has value on the open market, as well as the willingness of an increasing number of merchants and service-providers—including some law firms—to accept Bitcoin payment.
In New York City, entrepreneur Willard Ling is talking to regulators about introducing the first Bitcoin ATM there, the New York Post reports. The newspaper says the machine would allow customers to purchase bitcoins on their smartphones by feeding the ATM cash, but it isn’t clear whether the machine would also provide cash to those selling bitcoins.
Robocoin also plans Bitcoin ATMs in Chicago and Australia, according to DNAinfo.com and the Digits blog of the Wall Street Journal.
Although regulators in the U.S. are still getting their heads around Bitcoin, and the Internal Revenue Service isn’t sure how to treat it, Bitcoin “is the most regulated technology I’ve ever seen in my life,” says general counsel Patrick Murck of the Bitcoin Foundation, who spoke with the Washington Post (reg. req.) last month. “If you want to be a Bitcoin business, like an exchange—where the rubber meets the road and cash turns into Bitcoin—you’re a ‘money services business.’ You are regulated to the hilt” by entities like the Treasury Department’s Financial Crimes Enforcement Network.
Murck predicts that Bitcoin will be increasingly accepted and successful as a global regulatory structure that recognizes Bitcoin transactions is established.
See also:
ABAJournal.com: “SEC has power to regulate Bitcoin investments, federal judge rules”
ABAJournal.com: “Should ‘virtual currencies’ be subjected to real-life regulation?”
Daily Intelligencer (New York Magazine): “I Used the World’s First Bitcoin ATM”
Canada Real Time (Wall Street Journal, sub. req.): “Canada Says Bitcoin Isn’t Legal Tender”
