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Bitcoin ATMs are Coming

Lamassu Prepares for ATM Pre-Orders

By Swagato Chakravorty
Tuesday, July 9th, 2013

Even as Bitcoin continues to face regulatory hurdles and an uncertain future on the market—the recent government scrutiny into Mt. Gox, Bitcoin’s largest exchange, for example—the virtual currency continues to hit the news. The latest on the Bitcoin front is that a machine that will convert cash to Bitcoins is about to be launched worldwide later this summer.

Lamassu Bitcoin ATMThe machine is being developed by Lamassu and was exhibited at a Bitcoin event in London just recently, notes CNBC. It’s hard to tell what sort of demand there will be for such a Bitcoin ATM, though co-founder Zach Harvey claims that pre-orders are about to begin.

One might guess the more innovative among coffee-shops, restaurants, and other retail units might experiment with incorporating Bitcoin into their work-flow. It’s unlikely many major business entities will bother with Bitcoin, particularly in light of its troubled reception under the federal eye and the complete lack of any real regulatory framework.

The machine looks like it’ll emerge sometime around late August and will be sold for $4,000 per unit. Users with Bitcoin accounts will also be able to use a smartphone app that scans a matrix code unique to the ATM machines. The machine will then accept one of nearly 200 currencies and credit the user’s Bitcoin account appropriately.

One catch is that, at least early on, the machine might only be able to accept deposits. However, this is something Lamassu is looking at closely, and it’s likely that two-way functionality will not be far off.

CNBC showcased the device back in May, but already, Bitcoin ATM competition grows. BitcoinATM, for example, has already been pushing its own ATMs out.

Bitcoin presently trades around $80. The history of this virtual currency is marked by wild swings in both directions. Partly to control that movement, and partly to promote themselves, Cameron and Tyler Winklevoss (of Facebook notoriety) recently announced they’ll be launching a Bitcoin fund.

All submissions are in, and it’s a wait to see whether their application will be approved. If it is, on the one hand we’ll see a measure of stability in the completely unstable Bitcoin market, but on the other hand this, sort of regulation—even at minimal levels—is somewhat antithetical to what the Bitcoin community wants. So it’s hard to tell how Bitcoins are going to fare.

California served the Bitcoin Foundation with a cease-and-desist notification just last month, and Liberty Reserve in Costa Rica was forced to shut down operations not that long ago. The problem these places are facing relates to Bitcoin’s uncontrolled framework. The difference between a regular money-transaction operation and money laundering lies precisely in that difference, which explains Bitcoin’s recent regulatory troubles.

Of course, this should not really affect the nascent Bitcoin ATM market, since such regulatory compliance is not these companies' responsibility. Indeed, Lamassu has already claimed that such responsibility lies on part of the buyer, not the company itself.

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Regulatory Troubles

However, as SlashGear notes, the Lamassu device works in tandem with the Mt. Gox and Bitstamp exchanges, which does link the fortunes of the latter to the functionality of the former.

Another notable point is that due to the stringent regulations formulated by the U.S. Financial Crimes Enforcement Network concerning machines like Lamassu’s Bitcoin ATM, the company won’t actually be operating the machines. Rather, Lamassu will focus on selling it to others who will then be required to comply with the U.S. regulations.

That raises the question of whether the present regulatory scenario is actually throttling the emergent Bitcoin economy from really developing. I don’t think there’s a quick answer one way or the other. Certainly, as a virtual currency that commands significant real-world heft (after all, Bitcoins were trading at well over $100 not long ago and are still trading at levels near that), it’s desirable that Bitcoins operate under some form of regulatory framework.

On the other hand, the growing pains associated with developing a wholly new regulatory framework that can oversee this curiously virtual, intangible currency and economy is a new challenge. Accordingly, right now isn’t the best time to jump onto the Bitcoin bandwagon, but it is definitely worth keeping a close eye on.

 

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