Bitcoin ATMs: Handy Vending Machines or Money-Laundering Nightmares?
http://www.wired.com/wiredenterprise/2013/05/robocoin/
The Robocoin is an ATM for Bitcoins, and for a few glorious days this past weekend, on a conference center floor in San Jose, California, it dished out thousands of dollars in exchange for Bitcoins, the worlds most popular digital currency.
The two brothers who built the Robocoin Mark and John Russell, of Las Vegas are still trying to figure out what to do with their contraption. But one things certain: They dont want to operate it on their own. Mark Russell isnt even sure if thats legal.
Its the kind of problem thats emblematic of the ever-growing world of Bitcoins. Entrepreneurs sense big opportunity. Regulators arent sure what to make of it. And all that makes the future of Bitcoin ATMs as cloudy as it is interesting.
Russell is an over-the-counter Bitcoin trader. Hes the kind of guy you can call up whenever youre in Las Vegas and flush with Bitcoins. For a percentage of the transaction, hell meet you and swap Bitcoins for cash, or vice versa.
Back in January, he and his brother John came up with the Bitcoin ATM idea as way of automating what Mark Russell was already doing. They dropped by a Nevada slot machine maker, and soon, John a computer science student at the University of Nevada, Reno was tinkering with prototypes.
But there was a snag. A big one. In March, the Financial Crimes Enforcement Network, or FinCEN the government agency that tries to keep crooks out of the U.S. financial system published guidelines explaining what it thought of the Bitcoin world. And while the guidelines cleared up some things, they also made it pretty clear that the government viewed anyone operating a Bitcoin ATM as a money transmitter. And for the Russells, that meant theyd have to comply with a long list of regulatory requirements.
Mark Russell sees his machine as something like a vending machine. It trades a series of numbers for cash. But the feds seem to see it more like a mini Western Union office. We wanted to be a business that sold digital code for money, but now theyre classifying Bitcoin as a currency or a commodity, he says. So were in a bind.
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http://www.wired.com/wiredenterprise/2013/05/robocoin/