Australia is rapidly emerging as the fastest-growing market for Bitcoin automatic teller machines (ATMs), with the number of kiosks surging from just 73 two years ago to nearly 1,200 today. This remarkable growth has positioned Australia as the third-largest market globally for crypto ATMs, trailing only the United States and Canada. The influx of these machines has sparked significant interest and raised questions about the underlying drivers of demand for this contentious service.
Crypto ATMs: A new financial frontier
Crypto ATMs offer users the ability to exchange cash for cryptocurrency or vice versa, providing a convenient on-ramp to the digital asset market. In the United States, which dominates the global market, there are approximately 32,000 such machines, while Canada hosts around 3,000. Australia’s rapid rise to third place, with nearly 1,200 machines, highlights the country’s growing appetite for cryptocurrency despite the associated risks.
In an August earnings call, Brandon Mintz, Chief Executive Officer of US-based Bitcoin Depot Inc., revealed that the company has over 200 kiosks ready to be deployed in Australia, pending regulatory approval. This indicates that the growth trajectory for crypto ATMs in the country is far from slowing down.
A surge in demand amidst regulatory scrutiny
Coin ATM Radar’s data suggests that Australia’s recent growth in crypto ATMs leads the world, with operators arguing that these kiosks enhance financial inclusion by providing easy access to cryptocurrencies. However, the rise of these machines has also attracted criticism and concern from various quarters. Critics point to the risks of money laundering and scams, which can result in significant financial losses for users. In fact, crypto ATMs are banned in countries like the United Kingdom and Singapore, and Germany is currently cracking down on their use.
North American providers have been key to the expansion of crypto kiosks in Australia. According to Angela Ang, a senior policy adviser at blockchain intelligence firm TRM Labs, most operators in Australia have implemented some level of compliance controls. Nevertheless, Australian authorities have flagged crypto ATMs as a potential vulnerability for money laundering. Last year, police outlined a laundering technique where illicit cash is converted into digital assets via ATMs, and these assets are then cycled through multiple transactions to obscure their origins.
According to TRM Labs, the cash-to-crypto industry, which is dominated by crypto kiosks, has processed at least $160 million in illicit transactions globally since 2019. In Australia alone, approximately $223 million in illegal digital-asset activity was recorded between 2022 and 2023, according to estimates from consultancy Chainalysis Inc.
The impact of Australia’s gambling culture
One factor that may be driving the demand for crypto ATMs in Australia is the country’s entrenched gambling culture. Australia has the highest per capita losses on legal forms of gambling globally, a statistic cited by the nation’s health and welfare institute. This propensity for betting appears to be spilling over into the crypto market, where the volatile nature of digital coins offers another avenue for high-risk wagering.
Local banks have responded to the rise in crypto activity by imposing restrictions on transactions with digital-asset exchanges. Major banks like Commonwealth Bank of Australia, National Australia Bank Ltd., Australia & New Zealand Banking Group Ltd., and Westpac Banking Corp. have all introduced curbs due to concerns about scams. These restrictions have driven many local crypto users to seek alternative financial platforms, including overseas exchanges, according to Caroline Bowler, CEO of digital-asset exchange BTC Markets Pty.
A growing market with potential risks
The influx of crypto ATMs in Australia is also being fueled by new entrants like CoinFlip, a Chicago-based company that has seen the value of digital-asset transactions through its Australian ATMs more than quadruple in the past year. CoinFlip CEO Ben Weiss argues that given crypto operates as a “parallel financial system to the fiat system,” it is logical to have a physical component for cash access. The company charges between 6% and 14% in commissions in Australia, slightly lower than the 6% to 18% charged in the United States.
Bitcoin Depot’s Mintz drew a parallel between Australia and the US state of Texas, which has a similar population size but boasts roughly 3,000 to 4,000 Bitcoin ATMs. He believes that the Australian market has the potential to expand by thousands of machines over the next few years, highlighting the strong demand and growth potential in the region.
Conclusion: Booming growth amidst regulatory and ethical concerns
Australia’s leadership in the global crypto ATM market underscores the country’s growing interest in digital assets. However, the rapid expansion of these machines raises significant regulatory and ethical questions, particularly concerning financial crime and consumer protection. As the industry continues to grow, it will be crucial for Australian authorities to balance the benefits of financial inclusion with the need to mitigate the risks associated with this burgeoning technology.