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Question

I had a meeting on Saturday with a company who wants to give me an exclusive territory to place bitcoin ATM's.

I have been in business for many years, and have an existing distribution network in place, thus why they approached me with this offer.

There are 2 types of Bitcoin ATM's. 1 only sells bitcoin, the other sells and also will purchase bitcoin.

My first concern is that the US Govt will ban bitcoin, rendering my new business useless.

So I got the manufacturer of the ATM to agree to allow me to lease them.

Costs me more over time, but at least I won't have any outlay of my own cash should this go belly up.

The margins are pretty good.

I'm already setup for the deployment and maintenance of the ATM's.

Can anyone think of potential pitfalls that I should be aware of?

The whole bitcoin thing is still very new to me

Hugh_Jorgan · Answer

I had a meeting on Saturday with a company who wants to give me an exclusive territory to place bitcoin ATM's.

I have been in business for many years, and have an existing distribution network in place, thus why they approached me with this offer.

There are 2 types of Bitcoin ATM's. 1 only sells bitcoin, the other sells and also will purchase bitcoin.

My first concern is that the US Govt will ban bitcoin, rendering my new business useless.

So I got the manufacturer of the ATM to agree to allow me to lease them.

Costs me more over time, but at least I won't have any outlay of my own cash should this go belly up.

The margins are pretty good.

I'm already setup for the deployment and maintenance of the ATM's.

Can anyone think of potential pitfalls that I should be aware of?

The whole bitcoin thing is still very new to me

TheGoldenGoose · Answer

Still a lot of volatility in bitcoin but that shouldn't concern your end of the business. You are like the vendor who sold prospecting pans during the Gold Rush. Your end turns a profit no matter what happens. Right or Wrong?

Hugh_Jorgan · Answer

Goose, that would be correct.I am unaffected by the price swings.I&#x27;m curious if anyone has any insight into the regulatory aspect of bitcoin, or any other cryptocurrencies.

HockeyTeeth · Answer

I think they are heavily regulated due to the potential for money laundering.

Bitcoin ATMs and the regulations that impact them are getting a lot of attention lately. In effort to try and educate Bitcoin ATM operator hopefuls, I’ve compiled a knowledge dump of what I have learned since I began looking into this (August 2013). I wish I could have understood all this from the beginning. It would have saved me months and thousands of dollars.

Federal:
The main objective of regulation at the Federal level is to prevent money laundering. The Financial Crimes Enforcement Network (FinCEN) defined Bitcoin exchanges as Money Services Businesses (MSBs), further, they are defined as a Money Transmitter which is a type of MSB. As such, they are subject to the requirements of the Bank Secrecy Act (BSA). The BSA requires MSBs and other forms of money transmitters to create, maintain, and follow an Anti-money laundering (AML) program. The MSB also must appoint an AML compliance officer. The AML program defines how the MSB will, by way of business rules and processes, comply with the BSA. That typically includes how they identify their customers and record the activity of each one within the scope of the business. If that activity crosses certain thresholds (as defined by the AML program), reports such as Suspicious Activity Reports (SARs) must be submitted to FinCEN. Registration is required at the Federal level (unlike the state level in which operators must apply for a license) and is pretty simple. You simply sign up on the website. Done. They don’t worry about you unless an issue comes up.

HockeyTeeth · Answer

Grabbed the above info off a forum, there is more but the provided link failed.

Hugh_Jorgan · Answer

Hockey ... I appreciate it I&#x27;m familiar with FINCEN and MSB&#x27;s and the federally mandated compliance issues because I deal with that in another business that I have. Anyone have a feel if the Fed might try to ban bitcoin at some point?

TheGoldenGoose · Answer

I absolutely 100% agree with faceoff... Hit&#x27;em and Run.

hillardoh1 · Answer

truth is if you form a LLC company and own the bitcoin machines out right chances are you will get a tax deductions for owning the machines and any repairs you get done to the machines or cost of doing businesness such as buying paper for the machine or parts or paying a repairman. Im not a tax person so consult your tax advisor. ALSO since bitcoin is new and no one as far as the law of the united states goverment is concerned can define what bitcoin is it is a sketchy business. No one knows is it a commodity or a currency by definition of the law.  Also there so much financial problems that could arise when you own the machines such as money laundering, washing dirty money. Dealing with the rico act. Im not saying you are doing a dirty business im saying you could be caught up in something sketchy because of someone elses dirty business.

hillardoh1 · Answer

They could try to ban it or try to slow it down. Look what happening in the country of venezuela. The country just defaulted on it debt. But people are gladly accepting bitcoin if you can mine it or accept but the goverment is shutting down electricity saying people are using too much to mine bitcoin.

BIGfnPOO · Answer

switerland is opening a btc bank, and china and japan is using it ...get down hugh....i want to do the las vegas route for you....D casino accepts Bitcoin in the casino....you can buy a yacht with BTc..get down,im ahead on it and got some ETH to boot..

BIGfnPOO · Answer

john morgan and other bankers nay say it,yet scoop it up quietly..

TheGoldenGoose · Answer

Hugh_Jorgan from Millionaire to Billionaire.

TheGoldenGoose · Answer

HJ:  Update please.  What happened?

Hugh_Jorgan · Answer

Goose, the state of CT has some significant barriers to entry for this particular business, which is why there is not a single bitcoin ATM in the state as of yet.

NY, which has a couple of hundred bitcoin ATMs installed, has a licensing program in place, which is fine with me.

I won't bore you with all the details, but in CT the application fee is $5000, and then they can turn down your application for absolutely no reason whatsoever.

They also require you to have a full time compliance officer on staff who is licensed in FINCEN and MSB. A person such as this would command a 6 figure salary ... and I don't have a single ATM installed yet.

There are other issues with the CT licensing process as well.

With all this said, I am still trying to get in.

Recently met with a large company in NY who has all the necessities already in place. Trying to partner up with them for CT.

Should know in the next couple of weeks if we can come to an agreement.

666LES · Answer

Just as NY is 1 of the worst places to do Business (IMO) as far as Taxes,Regulations, etc. it sure seems Conn. doesn&#x27;t want your business.

Hugh_Jorgan · Answer

LES, having owned small businesses in both NY and CT for the last 35 years, I will point out the most significant difference between the 2 states.

NY wants you to do business so they can tax/fee the living hell out of you.

CT doesn't want you to do business.

CT's barrier to entry for any new business is so far beyond what is reasonable that it has become absurd.

Years ago the fed deregulated the payphone industry because it was rightfully deemed a monopoly for the local bell companies.

CT still refused to allow private payphone operators in the state for years after the fed passed their ruling.

CT was the last state in the country to finally allow private operators in, and even then the licensing process was arduous, and needlessly overbearing.

CT has not been business-friendly for many years, and now they are reaping the penalty for that which they have sewn.

Businesses have been fleeing CT for years, and the state is facing its worst financial crisis in history.

Hugh_Jorgan · Answer

sewn = sown

Qwan61 · Answer

&#xA; &#xA;Hugh, I am way late on this but beware of the fed coin. Essentially, I think the feds will make it illegal to do transaction with other alt coins.&#xA;I cant find the article but the feds just today are mulling over bringing on the fed coin. When it will happen? Cash and other payment methods will probably not be allowed.&#xA; &#xA;https://bitcoinmagazine.com/articles/fedcoin-could-be-coming-soon-would-it-really-challenge-bitcoin/

Hugh_Jorgan · Answer

Qwan,That&#x27;s a very interesting article.Amazing how many contradictions there are within the idea of a gov&#x27;t sponsored fed coin. The reality of bitcoin and other current crypto&#x27;s is that no one truly knows what will happen with them. Those who trade in it are simply gambling in a high risk - high reward game.I have been reading the thread on this site discussing bitcoin as a legitimate form of currency, and understand your stance on the subject. I also understand the stance of guys like vanzack. The reality is, there are way too many variables for anyone to truly know with certainty what will become of bitcoin and the cryptocurrency market.As per the article you linked, my opinion is that cryptocurrency will only continue to exist if the government&#x27;s are involved and in control.Regulation ... it&#x27;s coming. That you can be sure of.

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