In this recent interview, you can hear more interesting advice from Cory, TheCoinBros CEO. A company that currently has 60 machines and is steadily expanding throughout the east and west coast. He will be sharing his thoughts and experiences about different aspects of the Bitcoin ATM business.
The challenges of starting a Bitcoin ATM business
Starting a Bitcoin ATM business at a time when there were only 90 machines in whole California was tough, says Cory. Of course, the biggest obstacle was the regulation. They needed to plow through so much to actually make it past that barrier where most people just give up.
Now they have an established AML KYC policy. As he claims, if you agree to be a money service business and a financial institution, you must agree to play ball. If you don’t you will definitely get caught and sanctioned. Cory added that their policy is not that complicated and they never use the customer information for anything. He actually says that the AML KYC policy is there to protect the customers from different scams because anytime there is any sort of money involved there will always be bad people to try and take advantage of others.
Another challenge they faced at the beginning was acquiring the locations. That was mostly due to the lack of education. Bitcoin was very young, and people just didn’t know what it is, so the store owners were highly reluctant to put some magical internet money machine in their stores. Of course, when the crypto blew up in the coming years, pretty much all of them changed their minds.
The biggest challenge definitely was banking. At that time no bank wanted to go near any crypto-related business. It was just too much risk and they didn’t have the infrastructure in place. Again, it was too young. There were only a handful of banks that wanted to talk to them, but their condition was to make a large amount of money before doing business, which was absurd.
Eventually, they found the guys from Bankline who were breaking their backs from the beginning trying to help them and get the TheCoinBros started. That’s why Cory speaks very highly of them any time he gets a chance.
Expanding to foreign markets
As you probably already know, The United States dominates the Bitcoin ATM adoption. So an interesting topic is expanding to other markets like South or Central America for example.
When asked about what could be the possible challenges, Cory said that it would probably be the same, banking and compliance, with the addition of bureaucracy which is a known issue in a lot of underdeveloped countries as well as the Government. They can let you work at the beginning but simply change their mind at one point and get you in all sorts of trouble.
Even though TheCoinBros as a company does not plan to invest in foreign markets, for now, they are open to any sort of cooperation. But any potential partners need to have a robust AML KYC policy in place.
He feels that especially those under-banked countries can benefit from Bitcoin ATMs, but it’s just too much risk for now with the mentioned challenges.
When asked about the most popular altcoins Cory said that logically the most popular are the top 10 most valuable coins with Bitcoin, Ethereum, and Litecoin being the top 3. He notices the increasing popularity of XRP but they don’t support it yet.
When it comes to the machines Cory states that the General Bytes, which they use, are really good when it comes to implementing any new coins.
Using Bitcoin ATMs for remittance purposes
The interviewer asked another interesting question, wondering if Bitcoin ATMs can be used for remittance purposes. In other words, if someone can go buy Bitcoin in one country, and share the amount with his family in another country.
Cory then explained that sending the crypto directly from the machine to another wallet is not possible. They require the users to use their own registered wallet every time, and what they do after is not under their control. Apart from this being a regulatory requirement, he thinks that it really makes things easier for everyone.
So, it is possible, but he strongly advises against it because you can be a subject to many different scams.
The business flow
Cory was also very kind to explain different aspects of the Bitcoin ATM business flow.
First of all, TheCoinBros own all of their machines. They buy them from General Bytes and place them at the location. When a customer comes to the machine he needs to have a wallet which is typically on their phone. They support other means of transactions, like paper wallets, but really encourage people to use the wallet as the best way of storing crypto.
Yet another interesting question was related to the exchange rate, where Cory explained that the bill acceptor on the machines can accept many different bills and the exchange rate is just the percentage of what is pegged to that currency. And when you withdraw money since all the cryptos are priced in U.S. dollars you will be paid in U.S dollars and then you can go and convert them to any other currency.
Further on they discussed the reloading of the machines. Cory explained that there are two ways to do it.
One way is to connect the machines with the exchange directly, via the APIs. In this case, you would need a certain amount of funds on the exchange so when the customer goes to the ATM he will basically buy the crypto directly from the exchange using your funds.
The other way, which they use, is to own your own crypto. The thing here is that you need to monitor the balance so you don’t run out, but it gives you more control and you can potentially make more money on the volatility.
At the end of the interview, Cory shared a piece of honest advice. He said that if anybody is thinking of starting a Bitcoin ATM company they should do it now because in two years it will be next to impossible. He assures us that the big guys are creating a monopolistic environment so you have to be aggressive, be sure to handle compliance from the very beginning, and of course take good care of your customers.