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Starting a BTC ATM Business? Some Advice from Crypto Crow. Part 2.
<p>In the second video of the Crypto Crow Bitcoin ATM Business series, you will find out more about banking, AML/KYC, Compliance, and FinCEN. Jason will also reveal some shady practices performed by Bitcoin ATM Operators which will trigger a discussion about business ethics.</p>

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<iframe title=”Start a Bitcoin ATM Business Part Two” width=”604″ height=”340″ src=”” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture” allowfullscreen></iframe>

<h2>The Hardware</h2>

<p>After going through all of the options that we mentioned in the <a href=”” target=”_blank” rel=”noreferrer noopener”>previous post</a>, from General Bytes to Alibaba, he decided to buy the machines at <a href=”” target=”_blank” rel=”noreferrer noopener”>BitAccess</a>. The thing he liked the most is that they were very helpful from the start all the way up to the shipping of the machines. </p>

<span id=”more-3878″></span>

<p>His first order was 4 two-way machines which cost him $6.000 apiece without shipping. The shipping itself was even more expensive at $9.000 per machine which comes up to $60.000 in total. It was not a bargain.</p>

<p>Even though he bought two-way machines, he says that he will use them to sell Bitcoin only. It is because the buying option adds a whole other layer of complexity with compliance, and he is not ready to deal with that at the beginning. At later stages, he will think about going two-way.</p>

<p>Further on Jason explained how the money is handled. You basically need to hire an armored car pickup service and provide them auditable locks. That way they can be accountable and you can keep track of every withdrawal. </p>


<p>When you decide to start your own Bitcoin ATM business one thing is certain. You will not be able to get a bank account at any regular bank, no matter who you are. They simply consider these types of businesses very risky. </p>

<figure class=”wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter”><div class=”wp-block-embed__wrapper”>
<blockquote class=”twitter-tweet” data-width=”550″ data-dnt=”true”><p lang=”en” dir=”ltr”>13/38 <br>#3) Have you ever been blocked from opening an account at a bank or had your account closed? That’s a form of censorship. In 2019, my Bitcoin ATM business was rejected by a total of 17 banks across the country. <a href=”″></a></p>— burn the bridge (@econoalchemist) <a href=””>March 15, 2021</a></blockquote>

<p>Fortunately, there is a company called <a href=”” target=”_blank” rel=”noreferrer noopener”>BankLine</a> that will bypass the cooperation with the bank. But the trick is that you need to have a <strong>$500.000 minimum monthly</strong> volume to be eligible to work with them.</p>

<p>However, they connected Jason with a partner company that will support his newly established business. He didn’t want to reveal their name because the cooperation was not official but he said that this company will allow people to send their cash to the bank, after which it will get converted to Bitcoin and sent to the designated wallet. And all of that within 24 hours. He claims that a lot of businesses are going this way now because it eliminates some intermediate steps like going to the exchange and buying the Bitcoin manually.</p>


<p>As mentioned in the previous video, Compliance is one of the most important things that you need to handle when <a href=”” target=”_blank” rel=”noreferrer noopener”>starting a Bitcoin ATM business</a>. Hence, you need to have a compliance officer from the beginning. </p>

<p>Jason recommends <a href=”” target=”_blank” rel=”noreferrer noopener”>BitSource AML and their compliance officer</a>, Todd. He will be the guy in charge of monitoring the overall business from a legal perspective and he will make sure that there’s nothing fraudulent. In other words, he will keep everything compliant. If there’s any suspicious activity he will flag it, report it and take appropriate action. </p>

<p>BitSource AML charges $500 a month minimum for their services. The price rises a $100 for each additional machine if you grow a fleet over time.</p>

<h2>AML/KYC Policies and FinCEN</h2>

<p>If you want to get banking services from anyone, you need to <a href=”” data-type=”URL” data-id=”” target=”_blank” rel=”noreferrer noopener”>get a complete AML/KYC policy</a> package drafted up by an attorney. After a long search, Jason chose BitAML and Joe Ciccolo to write his. </p>

<p>Keep in mind that there is no template for AML/KYC policies because it has to be relevant to the state you plan to operate in. Especially if you plan to do your business in multiple states. Your policy needs to reflect that.</p>

<p>Joe’s service did not come cheap at $4.500. But this is one place where you do not want to save money because it will be a kind of foundation for your Bitcoin ATM Business.</p>

<p>Last but not the least, you have to go and register with FinCEN. Basically, it means that you have to announce the fact that you are operating your ATMs and officially name your compliance officer. Todd or whoever your compliance officer may be, can help you here, and guide you through filling the necessary forms.</p>

<p>After you are done with legal procedures, it is time to put your machines at good locations.</p>

<h2>Business Ethics</h2>

<p>Jason shared an interesting story he came across while scouting for the locations. So, he went to a friend of his who is a store owner to make him a business offer. He then learned that his friend already has a Bitcoin ATM at his store which intrigued him to find out about the conditions. </p>

<p>Apparently, the operator is charging a 6% fee and paying his friend 4%. This was immediately suspicious because it is simply too small of a margin for any business. After some asking around he was shown what it was all about. When he went to this machine the displayed price of Bitcoin was $52.300, while the real price was $43.000. A big difference.</p>

<p>Now this raises an ethical question.</p>

<p>On one side they are jacking up the prices and making money off of retail investors that don’t have a clue that they’re overpaying their Bitcoin. They add a 6% fee on top of that which also makes them appear as the operator with the lowest fee on the market (<a href=”” target=”_blank” rel=”noreferrer noopener”>average Bitcoin ATM fees</a>).</p>

<p>On the other side, the price difference serves as a kind of buffer that protects the operator from market volatility. Let’s say the operator sells the Bitcoin once a week. The price on the day of selling may be much lower than at the time it was bought. And if you take into account the endless procedures on the exchanges, you can say that the operator is at risk of losing serious money.</p>

<p>Jason concluded that some buffer needs to exist, to protect the business owner from going broke. But if you choose to jack up the prices, the ethical thing to do is to put up a disclaimer letting your customers know that they are overpaying and what is the reason for that.</p>


<p>This was an insight into the administrative tasks needed to start the Bitcoin ATM Business. After you ordered the machines, you need to acquire a business account. This is not possible through a bank, but a third-party company. Next, you will need to fulfill your legal responsibilities and obtain AML/KYC policy and register with FinCEN. To help you with these, you will have to hire a compliance officer and an attorney. After you are done, it is time to put your ATMs at the locations, which will be the main topic of the next video.</p>

<div class=”yarpp-related”>
<h3>Related posts:</h3><ol>
<li><a href=”” rel=”bookmark” title=”Revenue and costs of running a bitcoin ATM”>Revenue and costs of running a bitcoin ATM </a></li>
<li><a href=”” rel=”bookmark” title=”How Instacoin built a network of close to 100 Bitcoin ATMs in Canada”>How Instacoin built a network of close to 100 Bitcoin ATMs in Canada </a></li>
<li><a href=”” rel=”bookmark” title=”Interview with Chris McAlary, the CEO of Coin Cloud”>Interview with Chris McAlary, the CEO of Coin Cloud </a></li>
<li><a href=”” rel=”bookmark” title=”Interview – Bitcoin ATMs with Martijn Wismeijer”>Interview – Bitcoin ATMs with Martijn Wismeijer </a></li>
<p><strong><a href=””></a></strong> <a href=””>(Why?)</a></p> Thu, 18 Mar 2021 12:33:38 +0000 Bitcoin ATM News
Bitcoin ATM
Bitcoin ATM Regulation
Operating bitcoin ATM
Using bitcoin ATM
operating bitcoin ATM

Bitcoin ATM Market Dynamics February 2021
<p>At the beginning of February, the price of Bitcoin was $33,136. The price maintained the upward trend when it reached the highest value of all time at $57,488 on the 22nd. After that, it started to decrease and the month ended with a Bitcoin price at $46,156. We can notice that the price went up by 39% during the month.</p>

<figure class=”wp-block-image size-large”><a href=””><img loading=”lazy” width=”907″ height=”647″ src=”” alt class=”wp-image-3846″ srcset=” 907w,×214.png 300w,×548.png 768w” sizes=”(max-width: 907px) 100vw, 907px”></a></figure>

<p>The speed of bitcoin ATM installations maintained a stable rise between 7-8%.</p>

<blockquote class=”wp-block-quote”><p>Period Start: <strong>14934</strong>, Period End: <strong>16101</strong><br>Opened: <strong> <span>1310</span></strong>, Closed: <strong><span>143</span></strong>, Net Growth: <strong> <span>+1167 (7.8%)</span></strong></p></blockquote>

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<h2>Change by Manufacturers</h2>

<figure class=”wp-block-table”><table><tbody><tr><td><strong>Name</strong></td><td><strong>Start</strong></td><td><strong>End</strong></td><td><strong>Diff</strong></td></tr><tr><td>Genesis Coin</td><td>5725</td><td>6197</td><td>
<span>+472 (8.2%)</span></td></tr><tr><td>General Bytes</td><td>4033</td><td>4384</td><td>
<span>+351 (8.7%)</span></td></tr><tr><td>BitAccess</td><td>1473</td><td>1553</td><td>
<span>+80 (5.4%)</span></td></tr><tr><td>Coinsource</td><td>1097</td><td>1173</td><td>
<span>+76 (6.9%)</span></td></tr><tr><td>Bitstop</td><td>405</td><td>462</td><td>
<span>+57 (14.1%)</span></td></tr><tr><td>Bytefederal</td><td>283</td><td>339</td><td>
<span>+56 (19.8%)</span></td></tr><tr><td>LightningXchange</td><td>426</td><td>473</td><td>
<span>+47 (11%)</span></td></tr><tr><td>Shitcoins Club</td><td>127</td><td>136</td><td>
<span>+9 (7.1%)</span></td></tr><tr><td>Cryptocurrency ATM</td><td>50</td><td>59</td><td>
<span>+9 (18%)</span></td></tr><tr><td>Lamassu</td><td>622</td><td>630</td><td>
<span>+8 (1.3%)</span></td></tr><tr><td>ChainBytes</td><td>51</td><td>55</td><td>
<span>+4 (7.8%)</span></td></tr><tr><td>Ankerpay</td><td>3</td><td>5</td><td>
<span>+2 (66.7%)</span></td></tr><tr><td>zzBit</td><td>80</td><td>81</td><td>
<span>+1 (1.3%)</span></td></tr><tr><td>wBTCb</td><td>23</td><td>22</td><td>
<span>-1 (-4.3%)</span></td></tr><tr><td>Vault Logic</td><td>15</td><td>14</td><td><span>-1 (-6.7%)</span></td></tr><tr><td>White Edge</td><td>10</td><td>9</td><td><span>-1 (-10%)</span></td></tr><tr><td>BitXatm</td><td>69</td><td>67</td><td><span>-2 (-2.9%)</span></td></tr></tbody></table></figure>

<p><strong><a href=””>Genesis Coin</a></strong> continues to be the most active manufacturer. In February they added 472 new machines (8.2% increase). Likewise, <strong><a href=””>General Bytes</a></strong> continues to be the second on the list with 351 new installations (8.7% increase). <strong><a href=””>BitAccess </a></strong>was third with 80 new machines (5.4% increase).</p>

<h2><strong>Change by Operators</strong></h2>

<p>Operators who increased the number of machines by 4 or more over the past month:</p>

<figure class=”wp-block-table”><table><tbody><tr><td><strong>Name</strong></td><td><strong>Start</strong></td><td><strong>End</strong></td><td><strong>Diff</strong></td></tr><tr><td><a href=””>Bitcoin Depot</a></td><td>1630</td><td>1849</td><td>
<span>+219 (13.4%)</span></td></tr><tr><td><a href=””>CoinFlip Bitcoin ATMs</a></td><td>1510</td><td>1718</td><td>
<span>+208 (13.8%)</span></td></tr><tr><td><a href=””>Bitcoin of America</a></td><td>723</td><td>828</td><td>
<span>+105 (14.5%)</span></td></tr><tr><td>CoinCloud</td><td>1393</td><td>1473</td><td>
<span>+80 (5.7%)</span></td></tr><tr><td><a href=””>Coinsource</a></td><td>683</td><td>754</td><td>
<span>+71 (10.4%)</span></td></tr><tr><td><a href=””>Bitstop</a></td><td>491</td><td>548</td><td>
<span>+57 (11.6%)</span></td></tr><tr><td><a href=””>Byte Federal, Inc.</a></td><td>283</td><td>339</td><td>
<span>+56 (19.8%)</span></td></tr><tr><td><a href=””>RockItCoin</a></td><td>803</td><td>852</td><td>
<span>+49 (6.1%)</span></td></tr><tr><td><a href=””>GetCoins</a></td><td>181</td><td>230</td><td>
<span>+49 (27.1%)</span></td></tr><tr><td><a href=””>DigitalMint</a></td><td>447</td><td>494</td><td>
<span>+47 (10.5%)</span></td></tr><tr><td><a href=””>Localcoin</a></td><td>345</td><td>374</td><td>
<span>+29 (8.4%)</span></td></tr><tr><td><a href=””>Unbank</a></td><td>172</td><td>195</td><td>
<span>+23 (13.4%)</span></td></tr><tr><td><a href=””></a></td><td>0</td><td>17</td><td><span>17</span></td></tr><tr><td><a href=””></a></td><td>146</td><td>162</td><td>
<span>+16 (11%)</span></td></tr><tr><td><a href=””>Bitcoin Well</a></td><td>104</td><td>115</td><td>
<span>+11 (10.6%)</span></td></tr><tr><td><a href=””>Shitcoins Club</a></td><td>127</td><td>136</td><td>
<span>+9 (7.1%)</span></td></tr><tr><td>CoinShopATM</td><td>1</td><td>9</td><td>
<span>+8 (800%)</span></td></tr><tr><td><a href=””>Bitcoin4U</a></td><td>17</td><td>24</td><td>
<span>+7 (41.2%)</span></td></tr><tr><td>Just Digital Coin</td><td>232</td><td>238</td><td>
<span>+6 (2.6%)</span></td></tr><tr><td><a href=””>TheCoinBros</a></td><td>49</td><td>55</td><td>
<span>+6 (12.2%)</span></td></tr><tr><td><a href=””>BitNational</a></td><td>89</td><td>94</td><td>
<span>+5 (5.6%)</span></td></tr><tr><td><a href=””>Hodl Digital Services</a></td><td>63</td><td>68</td><td>
<span>+5 (7.9%)</span></td></tr><tr><td><a href=””>Digital Ventures Group LLC</a></td><td>40</td><td>45</td><td>
<span>+5 (12.5%)</span></td></tr><tr><td>Bitcoin Romania</td><td>27</td><td>32</td><td>
<span>+5 (18.5%)</span></td></tr><tr><td><a href=””>BitBoss ATMs</a></td><td>12</td><td>17</td><td>
<span>+5 (41.7%)</span></td></tr><tr><td><a href=””>Bitbox ATM</a></td><td>116</td><td>120</td><td>
<span>+4 (3.4%)</span></td></tr><tr><td><a href=””>PureCoin</a></td><td>19</td><td>23</td><td>
<span>+4 (21.1%)</span></td></tr><tr><td><a href=””>CoinMaster Bitcoin ATM</a></td><td>1</td><td>5</td><td>
<span>+4 (400%)</span></td></tr></tbody></table></figure>

<p>The top of the operator list is also unchanged. <strong>Bitcoin Depot</strong> was most active with 219 new installations (13.4% increase) followed by <strong><strong>CoinFlip Bitcoin</strong></strong> with 208 new machines (13.8% increase). <strong>Bitcoin of America</strong> was the third most active operator in February with 105 new installations (14.5% increase).</p>

<p>We must notice that the Hong Kong-based operator <strong></strong> installed the first 17 machines in February.</p>

<h2><strong>Change by Countries</strong></h2>

<figure class=”wp-block-table”><table><tbody><tr><td><strong>Name</strong></td><td><strong>Start</strong></td><td><strong>End</strong></td><td><strong>Diff</strong></td></tr><tr><td>United States</td><td>12269</td><td>13319</td><td><span>+1050 (8.6%)</span></td></tr><tr><td>Canada</td><td>1110</td><td>1183</td><td><span>+73 (6.6%)</span></td></tr><tr><td>Hong Kong</td><td>65</td><td>83</td><td><span>+18 (27.7%)</span></td></tr><tr><td>Romania</td><td>64</td><td>70</td><td><span>+6 (9.4%)</span></td></tr><tr><td>Austria</td><td>146</td><td>150</td><td><span>+4 (2.7%)</span></td></tr><tr><td>Spain</td><td>99</td><td>102</td><td><span>+3 (3%)</span></td></tr><tr><td>Belgium</td><td>38</td><td>41</td><td><span>+3 (7.9%)</span></td></tr><tr><td>Ireland</td><td>29</td><td>32</td><td><span>+3 (10.3%)</span></td></tr><tr><td>Ukraine</td><td>21</td><td>24</td><td><span>+3 (14.3%)</span></td></tr><tr><td>Turkey</td><td>6</td><td>9</td><td><span>+3 (50%)</span></td></tr><tr><td>Switzerland</td><td>99</td><td>101</td><td><span>+2 (2%)</span></td></tr><tr><td>Australia</td><td>21</td><td>23</td><td><span>+2 (9.5%)</span></td></tr><tr><td>South Africa</td><td>6</td><td>8</td><td><span>+2 (33.3%)</span></td></tr><tr><td>Poland</td><td>70</td><td>71</td><td><span>+1 (1.4%)</span></td></tr><tr><td>Italy</td><td>51</td><td>52</td><td><span>+1 (2%)</span></td></tr><tr><td>Hungary</td><td>48</td><td>49</td><td><span>+1 (2.1%)</span></td></tr><tr><td>Georgia</td><td>24</td><td>25</td><td><span>+1 (4.2%)</span></td></tr><tr><td>Mexico</td><td>8</td><td>9</td><td><span>+1 (12.5%)</span></td></tr><tr><td>Anguilla</td><td>1</td><td>2</td><td><span>+1 (100%)</span></td></tr><tr><td>Slovakia</td><td>51</td><td>50</td><td><span>-1 (-2%)</span></td></tr><tr><td>Slovenia</td><td>20</td><td>19</td><td><span>-1 (-5%)</span></td></tr><tr><td>Germany</td><td>51</td><td>49</td><td><span>-2 (-3.9%)</span></td></tr><tr><td>Estonia</td><td>10</td><td>8</td><td><span>-2 (-20%)</span></td></tr><tr><td>United Kingdom</td><td>215</td><td>210</td><td><span>-5 (-2.3%)</span></td></tr></tbody></table></figure>

<p>The <strong>United States</strong> broke the 1k mark in again February with 1050 new installations (8.6% increase). As usual, <strong>Canada </strong>was the second most active country with 73 new machines (6.6% increase). The already mentioned <strong>Hong Kong</strong> was third, with 18 new installations (27.7% increase).</p>

<h2><strong>Cryptocurrencies Support</strong></h2>

<p>Find the latest stats of <a href=””>various cryptocurrency machines here</a>.</p>

<p>Cryptocurrencies support saw the following increases over the past month:</p>

<figure class=”wp-block-table”><table><tbody><tr><td><strong>Name</strong></td><td><strong>Start</strong></td><td><strong>End</strong></td><td><strong>Diff</strong></td></tr><tr><td>Bitcoin</td><td>14733</td><td>16091</td><td><span>+1358 (9.22%)</span></td></tr><tr><td>Altcoins</td><td>9885</td><td>11038</td><td><span>+1153 (11.66%)</span></td></tr><tr><td>Litecoin</td><td>9624</td><td>10696</td><td><span>+1072 (11.14%)</span></td></tr><tr><td>Ether</td><td>8470</td><td>9413</td><td><span>+943 (11.13%)</span></td></tr><tr><td>Dogecoin</td><td>75</td><td>628</td><td><span>+553 (737.33%)</span></td></tr><tr><td>Dash</td><td>2768</td><td>3051</td><td><span>+283 (10.22%)</span></td></tr><tr><td>Bitcoin Cash</td><td>4415</td><td>4643</td><td><span>+228 (5.16%)</span></td></tr><tr><td>Tether</td><td>549</td><td>619</td><td><span>+70 (12.75%)</span></td></tr><tr><td>Lightning BTC</td><td>11</td><td>13</td><td><span>+2 (18.18%)</span></td></tr><tr><td>Ripple</td><td>122</td><td>121</td><td><span>-1 (0.82%)</span></td></tr><tr><td>Zcash</td><td>100</td><td>98</td><td><span>-2 (2%)</span></td></tr><tr><td>Monero</td><td>186</td><td>181</td><td><span>-5 (2.69%)</span></td></tr></tbody></table></figure>

<p>The percentage of Bitcoin ATMs supporting any other cryptocurrencies than Bitcoin dropped a bit and is now at <strong>66.5%</strong>. <strong>Litecoin </strong>was again the second most added coin in February with 1072 additions (11.14% increase) followed by <strong>Ether </strong>with 943 additions (11.13% increase)<strong>. Dogecoin </strong>was the third most added coin with 553 additions (737.33% increase). This was due to its price surge in February.</p>


<p>In February 2021, the price of Bitcoin reached the highest value ever. Genesis Coin and General Bytes are again the most active Manufacturers. The United States continues to dominate the countries list. Dogecoin experienced a significant increase in its ATM adoption.</p>
<div class=”yarpp-related”>
<h3>Related posts:</h3><ol>
<li><a href=”” rel=”bookmark” title=”Bitcoin ATM Market Dynamics September — November 2017″>Bitcoin ATM Market Dynamics September — November 2017 </a></li>
<li><a href=”” rel=”bookmark” title=”Bitcoin ATM Market Dynamics July 2018″>Bitcoin ATM Market Dynamics July 2018 </a></li>
<li><a href=”” rel=”bookmark” title=”Bitcoin ATM Market Dynamics July 2019″>Bitcoin ATM Market Dynamics July 2019 </a></li>
<li><a href=”” rel=”bookmark” title=”Bitcoin ATM Market Dynamics May 2020″>Bitcoin ATM Market Dynamics May 2020 </a></li>
<p><strong><a href=””></a></strong> <a href=””>(Why?)</a></p> Fri, 05 Mar 2021 21:30:54 +0000 Bitcoin ATM Statistics
New locations
market dynamics
new locations

How Crypto ATM Operators Ensure Compliance – Accounting
<p>In the United States, the IRS views cryptocurrency as a property (for businesses) <a href=”″>[1]</a>. This means all cryptocurrency related transactions must be tracked and the capital gain/loss accounted for. To ensure compliance and to prepare for any potential audits, transaction records should be kept for 7 years as recommended by the IRS, this means safeguarding 7 years worth of cryptocurrency transaction records for operators <a href=”″>[2]</a>.</p>

<figure class=”wp-block-image size-large”><a href=””><img loading=”lazy” width=”800″ height=”381″ src=”” alt class=”wp-image-3835″ srcset=” 800w,×143.png 300w,×366.png 768w” sizes=”(max-width: 800px) 100vw, 800px”></a></figure>

<p>Below are some common taxable events operators may encounter:</p>

<span id=”more-3827″></span>

<ul><li>Purchase of goods and services using cryptocurrency</li><li>Disposition of cryptocurrency in exchange for fiat</li><li>Exchanges of cryptocurrency to another</li><li>Airdrops</li><li>Mining</li></ul>

<h2>Operator Challenges in Cryptocurrency Accounting</h2>

<p>Operators need to consolidate their transaction data from all their data points for accurate bookkeeping and reporting. This can be a challenge due to several reasons.</p>

<p>A cryptocurrency ATM operator will most likely use multiple sources during the operation. Often a combination of secure hardware wallets, multisig software wallets, exchanges, custodian hot wallets, nodes and ATM Kiosks. The inflows and outflows of these wallets need to be tracked and auditable not only for internal efficiency and accountability but as well to ensure compliance during audits or when reporting taxes. Most of the said data points will offer API links or CSV exports.</p>

<p>The following are data points in which operators consolidate transactions from:</p>

<ul><li>Hot/Cold/Warm Custodian wallets</li><li>Exchanges</li><li>ATM Kiosks</li></ul>

<p>Most operators use a custodian hot wallet such as BitGo or CryptX during their operation. An ATM purchase request is forwarded to the providers exchange account. The exchange purchases the required cryptocurrencies and passes them to the client through a hot wallet. Hence wallets are mostly seen as a routing point for transactions and can be identified as the asset hub.</p>

<p>Transaction CSVs are the most common sources of transaction data that operators use for bookkeeping. An industry problem operators face when working with cryptocurrency transaction CSVs is a lack of industry standardization. All Exchanges have different API responses and CSV formats.</p>

<p>Regulation surrounding cryptocurrency related business activities can vary at multiple levels of government depending on the country. In the United States, an <a href=””>MSB license is a requirement for crypto ATM operators</a> to have; however a state may require an operator to obtain a license to conduct business in its jurisdiction. An example of this would be operators in the state of New York requiring a BitLicense to do business. The concept is similar in Canada. There is federal licensing (MSB) and meeting compliance of each province.</p>

<p>Clear regulations and guidelines are a very positive factor enabling further growth of the cryptocurrency ATM industry. The United States and Canada both have clear regulatory guidelines surrounding cryptocurrency businesses and how they can ensure compliance. With the USA and Canada leading the world in terms of number of installed cryptocurrency ATM machines, there is no coincidence that clear regulation is a factoring enabler of the booming industry.</p>

<h2>Transaction Reporting</h2>

<p>Operators need to be able to generate transaction reports from all data sources for accurate audits. These reports can be in the form of a CSV or PDF file. Furthermore, operators will need to disclose how cost and sales values for each transaction is calculated. Each report should showcase important details like transaction hashes, purchase cost, sale price, operator fees, machine ids etc. Let’s take an example below of a typical process an operator will go through when fulfilling the sale of cryptocurrency to a customer using a BTM.</p>

<p>Operator receives sale pending request from BTM and derives liquidity from an exchange:</p>

<p><strong>Step one:</strong></p>

<p>Exchange: BTC purchased with fiat (non-taxable event)<br>Exchange: BTC purchased with crypto (taxable event)<br>Fee payments are taxable</p>

<p><strong>Step two:</strong></p>

<p>BTC transferred to intermediary wallet (non-taxable event, internal transfer)<br>Fee payments are taxable</p>

<p><strong>Step three:</strong></p>

<p>BTC transferred to customer’s wallet from intermediary wallet (taxable event, disposition)</p>

<p>In a real life example, operator A derives liquidity from Gemini to then fill the multisig BitGo wallet which in turn is the source for fulfilling orders from BTMs. For tax purposes, the acquisition of cryptocurrency through liquidity solutions like exchanges and dispositions at the BTM need to be tracked and linked together despite the intermediary transfer in between. However, the IRS required operators to report both acquisitions and dispositions <a href=”″>[3]</a>.</p>

<p>International Financial Reporting Standards (IFRS) must be followed, this would include measuring assets at fair market value. An example of this would be calculating the cost of a Bitcoin purchased from one exchange and calculating the cost of a Bitcoin disposed via a wallet. The cost of the Bitcoin purchased in the exchange will simply derive from the exchange’s purchase price at the timestamp of the trade. Calculating the cost of a Bitcoin disposed (in the tax context of disposition) via a wallet is a much less simple process. A market aggregated index must be used to determine the fair market value of that Bitcoin disposition to garner the most accurate cost. The timestamp of the disposition would be verifiable via the blockchain.</p>

<p>Accurate cost calculation is imperative for cryptocurrency ATM operators due to the sheer practice of treating digital currencies as inventory. The inventory cost when sold would reflect on the Cost of Goods Sold (COGS) calculation which is then used to determine the profitability of sales. In the jurisdictions where cryptocurrency dispositions are subject to capital gains tax, the taxes owed on the appreciated gains made is a further expense on the profitability of sales. Of course the inverse can occur as well, capital losses declared by an operator would then be used as a deductible in the next corporate tax filing. Cryptocurrency operators would typically follow the cost basis (FIFO/LIFO) or weighted average cost (WAC) accounting methods for calculating capital gain and loss of each cryptocurrency disposition.</p>

<h2>Accounting Solutions for Operators</h2>

<p>Operators will need to consolidate and normalize all transaction data, run calculations in one place for a full auditable report. This can be done through data synchronization of multiple sources. There is a significant amount of manual accounting and reconciliation involved in verifying inflows and outflows of cryptocurrencies. At scale, a manual focused process behind accounting and reconciliation is costly and time consuming. There are companies which provided solutions dedicated for this task. For example, Cryptoworth builds software products such as <a rel=”noreferrer noopener” href=”” target=”_blank”>Cryptoworth CAP</a> that solves the problem operators face. They designed the software to capture all data points, track the asset flows end-to-end, run calculations such as Cost basis, WAC on large data sets with a very high accuracy. This sophisticated automation helps to reduce the reporting and accounting burden on the operators allowing them to focus on business growth rather than bookkeeping.</p>

<h2>Cryptoworth CAP for Operators</h2>

<p>Currently Cryptoworth’s solution has native CSV support for Genesis ATM, General Bytes ATM and Bitaccess. Operators using the supported BTM machine software integrations will be able to log into their BTM back office portal to export CSV reports to then upload these CSVs into Cryptoworth CAP for the purpose of transaction consolidation, digital portfolio management and tax calculations. With an operator’s transaction data uploaded onto Cryptoworth CAP, the profits, losses, realized and unrealized gains/losses will all be displayed. The asset flow from exchange to wallet to ATM can be tracked flawlessly and advanced reconciliations can be done automatically through data manipulation features. Cryptoworth produces auditable reports on calculations which further helps the back office to validate calculated values.</p>

<p>Links in the text:</p>

<ol><li>“Frequently Asked Questions on Virtual Currency Transactions” <a href=”” target=”_blank” rel=”noreferrer noopener”></a></li><li>“How long should I keep records?” <a href=”” target=”_blank” rel=”noreferrer noopener”></a></li><li>“Frequently Asked Questions on Virtual Currency Transactions” <a href=”” target=”_blank” rel=”noreferrer noopener”></a></li></ol>
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<p><strong><a href=””></a></strong> <a href=””>(Why?)</a></p> Wed, 24 Feb 2021 13:14:45 +0000 Coin ATM Radar
Bitcoin ATM
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