Bitcoin has always received a lot of flak by authorities due to its anonymous nature. The core aspect of what makes the currency unique from a users perspective. Its history dictates substantial reason for the formers cause of concern especially now since the deployment of more than 5400 Bitcoin ATM’s worldwide.
The way these ATM’s work is that anybody can purchase Bitcoins either by using cash or a debit card and are always connected to the internet. Some have a bi-directional functionality where you can even get cash in exchange for Bitcoins. You need to have a wallet address in order to scan at the machine so it knows from which wallet the Bitcoin is being deposited or being sent to.
The problem here lies within the fact that rules established to allow money handlers (banks, financial institutions etc) to have a record of their customer or their transactions doesn’t apply to these cash machines. While that still stands as its main point of attraction towards more financial sovereignty, people can easily take advantage of such a gap in the system.
Recently in May, the Spanish police announced that they brought down an entire money laundering operation that used these kind of ATM’s. According to the report, they arrested 8 Latin Americans and Spaniards who supposedly transferred more than $10 million with the use of 9 different companies for drug trafficking in Columbia and many other countries.
They allegedly hired 2 ATM’s from trading platforms that were unaware of it being used in this particular way and installed them in an office in Madrid. Which was disguised as a center for cryptocurrency trading and sending remittances, where money was being transferred from bank accounts to trading platforms in order to top up the machines with digital currencies including Bitcoin.
People with false identities would then deposit cash in these machines and obtain a QR code from which they could withdraw the respective cryptocurrency from the exchanges. Drug traffickers would receive these Bitcoins and could cash them in as payment for their services. This plot provided a justification for the large sums of money being deposited in Spanish bank accounts without raising any red flags.
Situations of unethical behavior like this further creates a paranoia towards cryptocurrencies and there have been instances where this has caused authorities to act out even when people were trying to make cryptocurrencies more accessible to people.
Like in the case of Unocoin, an Indian based cryptocurrency exchange who tried to counter RBI’s move of declaring that cryptocurrency was not a legal tender (medium of payment recognized by law that can be used to meet a financial transaction) in India. They installed a Bitcoin ATM at a mall in Bangalore in October of 2018, made by ATM maker NCR to overcome this challenge in order to thrive in an environment with no Government support.
This was quickly shut down by the Bangalore police who arrested the founders Harish B V and Sathvik Viswanath as they believed that it was an act of illegal conduct. Speculators assumed the reason behind it was the same as the aforementioned case that it could play a catalyzing role in helping people launder money or evade taxes.
Bitcoin ATM manufacturer, Robocoin have created a software pack known as Coin SDK that will convert any traditional ATM into a dual functioning one that will be able to dispense BTC. The ATM kiosk operator only needs to install the software in a normal ATM and the token transactions will be automatically identified and managed through a wallet system.
This implementation of dual functionality will inevitably lead to mass adoption of cryptocurrencies which is great news for the crypto community who believe in its vision of being more financially independent. However, this also provides an easier way for unscrupulous actors to take advantage of this and evade the system.
It’s still unclear how governments will respond to this idea and if we will ever see it being implemented in a regulated way. The fact still remains that mass adoption of digital currency seems like more of an achievable goal rather than a (u/dis)topian fantasy.
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