As Bitcoin and cryptocurrencies continue to gain popularity, running a Bitcoin ATM can be a lucrative business opportunity. This can be especially profitable if your target business location has a large number of people who are Bitcoin or cryptocurrency savvy.
If you are thinking of setting up a Bitcoin ATM business in your neighborhood or you see a high-value location, then, this post comes to prepare you for the journey ahead.
As with running any other type of business, operating a crypto ATM is no different. However, running a BTC ATM can have a unique twist since the regulatory framework in one country is different from a regulatory framework in another country or state.
1. Register your Bitcoin ATM business
Being a business, registration is required. With registration requirements being diverse from state to state, you should make sure you have an in-depth knowledge of the registration process.
In the United States, any individual looking to run a Bitcoin ATM needs to register with the Financial Crimes Enforcement Network (FinCEN). Registering with FinCEN is an easy task since everything can be done over the internet and approval made within approximately 3 days.
Note that although FinCEN’s over the web registration process may involve pressing next and ticking a few checkboxes, beware that the regulator has power over what you do and how you do it at your Bitcoin ATM.
When being regulated by FinCEN, you will to keep particular transactional details and letting the regulator know if a transaction involves abnormally large amounts of money.
2. Write an AML program
Instead of FinCEN forcing a Bitcoin ATM business to conform to the laid out anti-money laundering procedures, it gives general pointers on how a Bitcoin ATM owner needs to draft a written document.
The document should detail how they will safeguard their Bitcoin ATM from being used by money launderers.
After drawing a comprehensive AML program, you need to test how the controls work on a real-life scenario.
If following the laid out FinCEN rules in developing a comprehensive AML program is difficult, it is advisable to seek legal advice which will be an additional cost.
3. The Bitcoin ATM machine
The location and the amount you are planning to spend on the business will also determine the type of a BTC ATM you will purchase.
Here, you will have to choose between a one-way, a two-way, or just a Bitcoin ATM vendor. A two-way bitcoin machine supports both buying and selling while a BTC ATM vendor only exchanges fiat with Bitcoin. Two-way BTC ATMs are costly compared to vendors
While considering a Bitcoin ATM machine, factors to consider will range from the manufacturer to the shipping costs incurred.
Additionally, whether the manufacturer will cater for the installation cost will either add or reduce the overall cost.
4. Installation location
This is another factor that will either increase or reduce your profit margins. Some locations e.g malls and other huge shopping complexes will often charge a huge amount for you to install a Bitcoin ATM. Although the rent may be huge, the high flow of people may keep you in business.
The renting price will be different depending on the location. Under very rare circumstances will you find a free spot to install your Bitcoin ATM.
5. How will you handle cash?
Since an ATM will be having cash that customers exchanged for Bitcoin, you will need qualified personnel to handle the cash deposits. For the best services, it’s advisable to engage a reliable external party to be collecting cash from the BTC machine to your bank.
Apart from handling cash, a Bitcoin ATM business must have a clear roadmap on how it will handle the refilling of the ATMs whether in terms of fiat or BTC denominations. Liquidity should be of top priority to ensure that the ATM does not have any dry moments in terms of fiat or BTC.
At first, the ratio required to maintain a Bitcoin ATM will need to be monitored before settling on a specific ratio.
6. Profit margins
After briefly looking at what is needed in order to establish a Bitcoin ATM business, let us briefly look at what will influence your profits.
One major factor is the campaign. Since an ATM can sometimes be away from the eyes of the public or it may be small enough to announce its presence, a campaign is needed to alert bitcoiners that you have installed an ATM for their convenience. This can be done either through print media or digital marketing.
The other factor is the number of transactions you handle. On average, reports have shown that with proper marketing and a prime location, a Bitcoin ATM can receive 130 transactions in 30 days.
From our discussion above, it is clear that running a Bitcoin ATM requires more than just purchasing and installing a BTC machine. As we have seen, being compliant with local laws and regulations is of apt importance when setting up a Bitcoin ATM business.