While Bitcoin ATMs and cryptocurrency in general is an expanding business, many banks are still reluctant to work with these businesses due to regulatory concerns. However, banks are developing models to determine if they can work with a cryptocurrency or Bitcoin ATM business. Mark Wright, director of operations for Cash2Bitcoin shared some details on what banks need for this business during a session at the ATMIA conference held from Feb. 8 to 10 in Orlando, Florida.
First, Wright shared the primary reason for banks to work with cryptocurrency businesses is due to fees and the deposits these companies keep at the bank.
But in order to decide whether they are going to work with cryptocurrency companies, banks have to do an enterprise risk assessment to determine if it is worth it based on the risk.
This assessment will take into account elements regulators will look for in the business such as checking if the company has the necessary state licenses, and is compliant with know-your-customer, anti-money laundering, Bank Secrecy Act and more.
In addition, “banks will evaluate their armored carrier providers to see if they collect cash for crypto and if they they support virtual vaults nationwide,” Wright said.
Lastly, Bitcoin ATM operators will need to be able to keep a close eye on their customer base, particularly high risk wallets that may be connected to criminal activity. To do this, Bitcoin ATM operators will need to implement blockchain monitoring tools.
“Customers need to demonstrate that they can block transactions high risk wallets in real time,” Wright said.
Overall, Bitcoin ATMs in general will need to demonstrate a great deal more compliance in these areas than traditional ATMs, Wright said.