'Wild west of finance': Why are there cryptocurrency ATMs?

The Canberra region has about 39 cryptocurrency ATMS, but for locals who haven’t engaged with digital currency before their presence can be confusing.

Cryptocurrencies, or cryptos, are digital tokens that allow people to make payments directly to each other through an online system.

The ATMS were created as an alternative payment method to remove the middleman of banks through a de-centralised system.

When transferring crypto, thousands of computers worldwide verify the transfer, instead of one bank.

Bought and sold on digital marketplaces called exchanges, cryptocurrencies don’t have any intrinsic monetary value — they are worth whatever people are willing to pay for them at the market on a given day.

Currently, Bitcoin is both the most popular crypto and the crypto with the highest monetary value, at about $150,000 per coin.

So if the main purpose of crypto is to be digital, why do crypto ATMs exist, and are they useful?

How do they work?

There is no tangible data on how many Australians are accessing the ATMs, however as of last July, according to YouGov, about 1.3 million NSW residents, 801,000 Victorians, 850,000 Queenslanders, 294,000 South Australians, and 462,000 WA residents said they currently owned crypto.

Award-wining technology journalist and founder of technology publication Pickr, Leigh Stark, told ABC Radio Canberra the primary function of a crypto ATM is to turn real money into digital money, or vice versa.

In order to use a crypto ATM a person must already have a crypto wallet that can generate a QR code.

At a crypto ATM the digital currency can be bought, sold, or both, but Mr Stark said most only offer access to between five and 10 of the major cryptocurrencies — almost always including Bitcoin.

Selling cryptocurrency through a crypto ATM means swapping it for its current market value in cash or with a debit card.

You can also buy cryptocurrency with cash or a debit card at a crypto ATM.

Mr Stark said he didn’t know “if there’s necessarily a need” for cryptocurrency ATMs.

“I can understand why some people might want to take some of their money out of it, so effectively turning a digital coin that only exists on the internet into hard money, that kind of makes some sense to me,” he said.

“But buying crypto through it, I’m not entirely sure I understand that — largely because of the amount of exchanges that exist online.

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Mr Stark warned taking money out from some crypto ATMs was taxable, and it was up to a user to remember and file.

“So the ATMs, effectively, they still have to abide by Australian government regulation regarding how they work,” he said

“But the whole thing about crypto and managing to take your money out of it, it qualifies as part of the capital gains tax.

“Not all crypto ATMs work that way, but if you take your money out, you have to remember what you did as a form of event, and file that information later on.”

Are Canberrans using Bitcoin ATMs?

Mr Stark said because a Bitcoin ATM usually only offered access to a selection of major cryptocurrencies, their usefulness depends on what exchanges a person invests in.

And they don’t all support selling, which is how a person can get money from them.

“Not every Bitcoin ATM works as a form of exchange, that’s for selling currency and they don’t all do that.

“In fact, far fewer support selling than they do buying.”

Mr Stark said crypto ATMs in the Canberra region typically accepted a maximum of $25,000 in cash, but he suspected the majority of users wouldn’t be carrying that much cash with them.

But he said much smaller amounts were not uncommon.

“I mean the reality is, if you put in 20 bucks, that’s 0.000013 of a single Bitcoin,” he said.

“[But] you absolutely could buy that small amount of crypto, and that’s quite normal.”

Mr Stark said often people begin buying crypto in these very small amounts and then decide whether to buy more depending on whether its value increases.

“Crypto is kind of the wild wild west of finance, depending on what type of coin you get, whether it’s one of the big ones like Bitcoin or one of the small ones like Shiba Inu or Ethereum, or anything like that, you might end up with a small amount that spirals into a big one,” he said.

Are they used for scams or crime?

In order to use the financial proceeds of crime, or ‘dirty money’, it first needs to be laundered to hide its illegal origins. 

Cryptocurrency offers a sophisticated way to do this by turning it into digital currency.

However, every crypto transaction is recorded on a blockchain — essentially a publicly available, online ledger — so to make the dirty money truly clean, the crypto is then put through a mixer service.

These services mix cryptocurrency together from a number of different users, which obscures the transaction trails and makes it very difficult to trace the original source.

Mr Stark said it wouldn’t shock him if Bitcoin ATMs were being used for criminal enterprises like money laundering or money mule activities.

“I’ve not seen it, but likewise, I’ve also never seen anyone actively use a Bitcoin ATM before,” he said.

“I’ve never had a reason to, and that’s kind of the point.

“But maybe I’m coming at the wrong times, maybe there are people coming through with $25,000 at 1am and I just have no idea.”

As for using them in scams, Mr Stark said that was less about the ATMs and more about cryptocurrency as a whole.

He said if someone is asking you to get Bitcoin for them “it’s probably a scam”.

“Some of the Bitcoin ATMs have been used for things like that, and so now the Australian government is effectively trying to track and work out how those actually work in relation.”