The global crypto ATM network has seen a significant decline in 2023, losing more than 5,700 units in the first four months of the year. This trend was reversed in May, when nearly 1,400 new machines were installed worldwide. What are the reasons behind this fluctuation and what does it mean for the future of crypto adoption?
According to data from Coin ATM Radar, the total number of crypto ATMs worldwide decreased by 5,850 units from January to April 2023, representing a 14% drop from the previous year. The net change of crypto ATM installations is calculated by subtracting the number of machines removed from the number of machines added in a given period.
The United States, which accounts for over 84% of the global crypto ATM network, was the main driver of this downtrend, as it removed more than 6,000 machines in the first four months of 2023. Some of the possible factors behind this reduction are:
- Regulatory uncertainty and compliance issues. Crypto ATMs are subject to various laws and regulations in different jurisdictions, which may impose licensing requirements, reporting obligations, anti-money laundering (AML) and know-your-customer (KYC) rules, and tax implications. Some operators may find it difficult or costly to comply with these regulations and decide to shut down their machines or relocate them to more favorable locations.
- Security risks and hacking incidents. Crypto ATMs are vulnerable to physical and cyber attacks, as they store sensitive information and funds. In March 2023, a hacker managed to access the confidential data of Bitcoin ATM manufacturer General Bytes, including passwords, private keys, and funds. The hacker reportedly drained at least 56 BTC and 21.82 ETH from the affected machines. This incident highlighted the need for enhanced security measures and best practices for crypto ATM operators and customers.
- Market volatility and low demand. Crypto ATMs are dependent on the price and popularity of cryptocurrencies, which can fluctuate significantly over time. In the first quarter of 2023, the crypto market experienced a sharp correction, with Bitcoin dropping by more than 50% from its all-time high of over $60,000 in February. This may have discouraged some potential users from buying or selling crypto through ATMs, leading to lower revenues and profits for operators.
Crypto ATM Installations Rebound by 4% in May 2023
Despite the negative trend in the first four months of 2023, the global crypto ATM network saw a sudden surge in May, when 1,397 new machines were added, representing a 4% increase from the previous month. This was the first positive net change of crypto ATM installations since December 2022, when 2,237 machines were added.
The reasons behind this rebound are not clear, but some possible factors are:
- Market recovery and increased demand. Crypto prices recovered in May, with Bitcoin reaching over $40,000 and Ethereum hitting a new all-time high of over $4,000. This may have boosted the demand and interest for crypto among users, who may have preferred to use ATMs as a convenient and fast way to buy or sell crypto.
- Innovation and expansion. Crypto ATM operators and manufacturers may have introduced new features and services to attract and retain customers, such as supporting more cryptocurrencies, offering lower fees, providing better user experience, and expanding to new locations and markets. For example, Australia installed 233 new machines in 2023, becoming the third-largest crypto ATM hub in the world, after the US and Canada.
Crypto ATMs: A Gateway to Crypto Adoption
Crypto ATMs are physical devices that allow users to buy or sell cryptocurrencies with cash or debit cards. They are often seen as a gateway to crypto adoption, as they provide an easy and accessible way for people to enter and exit the crypto space. Crypto ATMs can also serve as a bridge between the traditional and the digital economy, enabling financial inclusion and empowerment for the unbanked and underbanked populations.
However, crypto ATMs also face several challenges and limitations, such as regulatory uncertainty, security risks, market volatility, high fees, and limited availability. These factors may hinder the growth and development of the crypto ATM industry and its potential impact on the crypto ecosystem.
As the crypto market evolves and matures, crypto ATMs will likely play an increasingly important role in shaping the future of digital currencies. They will need to adapt and innovate to meet the changing needs and expectations of users, regulators, and operators, while ensuring the security, reliability, and convenience of their services.