Factors to Consider When Opening a Bitcoin ATM Business Part 4

Factors to Consider When Opening a Bitcoin ATM Business Part 4

Expenses associated with a cryptocurrency ATM business. Legal Expenses.

 

A cryptocurrency ATM business is a brick-and-mortar business, which means that you will have typical expenses associated with the business, such as costs of the cryptocurrency ATM hardware (such costs range between USD$3,000 and USD$9,000), liquidity funds (about USD$15,000 per ATM), rent, service, marketing and advertising. It is important to understand that these expenses are typical for any brick-and-mortar business. There are countless books written about these expenses and how to minimize them, from negotiating lower rent with your landlord to working on joint venture deals to promote your business without paying any cash out of your pocket.

Most likely, the part of the business that will require the most attention (and the part that is unique to the business of cryptocurrency ATMs) is going to be legal services and making sure that you are complying with the federal and local regulations about cryptocurrencies.

In many municipalities, you will need to get a special permission from the authorities to operate a cryptocurrency ATM.

While it is true that the government is typically slow to catch up with new technologies and innovation and the example of Uber, Lyft and other technology companies proves that it is possible to operate in a grey legal area for quite some time, this example also shows that a business that doesn’t fully comply with the law may end up badly. For example, during its short history Uber has had all kinds of lawsuits against the company, from customers not happy with the service to drivers who claim that Uber misclassified them. Uber has collected billions of dollars from investors and has enough money to hire the best attorneys in the world, which is probably not your current situation, otherwise you would not be reading this article.

One of the cheapest approaches is similar to the approach of marketing your business by partnering with other businesses that have your potential clients. With legal compliance, you could find other cryptocurrency ATM operators in your legal jurisdiction and find out what and how they have done to comply with the regulations.

Currently, the majority of cryptocurrency ATMs in the world are located in the United States, with a small percentage of the machines installed in various locations throughout Canada and the European Union. For this reason, the remainder of this article will discuss the regulations in the United States of America.

 

In the USA, you will have to deal with federal, state, and municipal regulations. Depending on your area, municipal regulations may not yet exist, but the state will most likely have at least some regulations in place.

One of the most important federal regulations that you will need to comply with is called the Bank Secrecy Act of 1970, or BSA for short. This law is also known as the Currency and Foreign Transactions Reporting Act or as the anti-money laundering law or AML for short. If you encounter abbreviations such as AML, CFTRA/BSA, BSA/AML, it is most likely that they refer to the same legal document.

The main goal of this law is for banks and other businesses in the financial industry to keep records in a way that prevents money laundering and helps the federal government to detect money laundering. Some of the provisions of the law include the requirement to keep a log of cash transactions, to report certain kinds of suspicious activity and to file reports with the government if the daily totals start surpassing $10,000.

The law is called BSA 1970 because the United States Congress passed it in 1970. President Nixon signed the bill that same year. Over the years, there have been numerous lawsuits that claimed the bill to be unconstitutional and to violate the privacy of the residents of the United States, but none of the lawsuits have succeeded and eventually all financial institutions started to comply with the requirements of the law.

The law requires all financial institutions to file five various types of reports. These reports are Currency Transaction Report or CTR, Suspicious Activity Report or SAR, Foreign Bank Account Report or FBAR, Monetary Instrument Log or MIL and Currency and Monetary Instrument Report of FinCEN Form 105.