As the digital asset market continues to evolve, the use of cryptocurrency ATMs grows with it. Over the past decade, nearly 40,000 cryptocurrency ATMs have popped up worldwide.
Bitcoin (BTC) ATM service provider, Bitcoin of America, had carved out a slice of the market but recently closed shop in the United States State of Connecticut due to a lack of proper licensing.
The Connecticut Department of Banking (DoB) issued a cease and desist order against the company, accusing it of operating unlicensed crypto ATMs in the state. But the allegations didn’t stop there; the firm was also accused of facilitating scams by allowing transactions related to fraudulent activities.
In response to the challenges, Bitcoin of America released a statement claiming it would immediately halt all of its operations in Connecticut. While the decision marked the end of the company’s presence in the state, it also underscored the regulatory hurdles faced by crypto ATM operators, particularly in the United States.
The closure also sent ripples across the crypto community, leading many industry observers to question the long-term efficacy and utility of these machines.
Connecticut closure explained
Due to the nascency of the cryptocurrency industry, marrying digital currencies with conventional financial structures — as in the case of crypto ATMs — requires intricate regulatory supervision. This is particularly true in Connecticut, where the DoB oversees ATMs under the Money Transmission Act.
The act requires that any service involving the transfer of money, including the conversion of traditional currency to cryptocurrency, must secure a money transmitter license.
On May 22, the Connecticut DoB claimed that Bitcoin of America had not secured the necessary license to operate Bitcoin ATMs in the state. It further stated that four Connecticut Bitcoin ATM users were scammed out of tens of thousands of dollars via Bitcoin of America’s kiosks.
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The DoB stated: “Bitcoin of America, following the consent order, compensated these consumers with a total of $86,000. After facing criminal charges, Bitcoin of America is in the process of ceasing its operations in Connecticut.”
In a separate incident in March, state officials in Ohio seized 52 Bitcoin of America ATMs, as authorities suspected scammers were using the kiosks.
Operating crypto ATMs is harder than it looks
Jason Grewal, chief legal officer…
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