Coinme has embraced the paradox of decentralization and anonymity in an industry that has increasingly embraced regulatory oversight.
Cryptocurrency has long flirted with a paradox. Blockchain technology enables decentralization and anonymity within an industry that has increasingly embraced regulatory oversight to gain traction with institutional finance and achieve widespread adoption.
The crypto exchange Coinme has embraced this paradox since its launch, building a network of regulated bitcoin ATMs it powers at established retail locations to offer the convenience and trust of a standard ATM or currency exchange transaction with the upside of access to decentralized digital assets.
“We founded Coinme in 2014 because we believed in the power of crypto to help people improve their everyday financial lives,” said CEO and co-founder Neil Bergquist in a recent statement announcing that the company had eclipsed $1 billion in retail sales. “New technologies and asset classes are usually only available to a select few. True to the servant ethos of bitcoin, we’re pleased to have made bitcoin accessible for all.”
Establishing Trust
The company’s origin story traces back to 2013, when Neil Bergquist first caught wind of bitcoin through a Seattle-based startup incubator he was running. As the cryptocurrency’s value soared from $100 to $1,000 that year, he sensed a burgeoning movement. His early venture into the space came in May 2014, when Coinme launched the first licensed bitcoin ATM in the U.S.
“Back then, people would read about [bitcoin], but they’d wonder how do you buy it?” Bergquist recalls[1] . “The way you purchased back then was: You meet a stranger online, go to a coffee shop, give them cash, [and] that person hands you a USB stick with bitcoin on it that they previously mined and then you can say, ‘I just bought bitcoin.’ That was a wholly unregulated, potentially very dangerous process, but consumers didn’t have many options back then.”
The goal behind Coinme’s regulated bitcoin ATMs was to establish credibility in a crypto realm that, especially in the early days, was often misconceived as a hangout for antiestablishment hackers and anarchists. Through partnerships with major providers like Coinstar and MoneyGram, Coinme has been able to bring bitcoin and other crypto to the same malls, grocery stores, and convenience stores that consumers have frequented to access financial services for years.
By adhering to KYC (know your customer) and anti-money laundering protocols, it de-risked the process for both consumers and legacy financial services, adding safeguards that appealed to the sensibilities of those curious about crypto but used to interacting with traditional financial institutions.
“Coinme is a licensed and regulated financial institution, just like the other financial institutions you know and trust,” Bergquist explains. “We do KYC. There’s no anonymity. We do [anti-money laundering], so we have controls and transaction monitoring in place including blockchain monitoring. If you’re trying to send crypto to a wallet that’s deemed too risky, it won’t go through. These basic protections help make crypto safer.”
Building an Accessible Bitcoin ATM Network
This regulatory stamp of approval has unlocked a series of major partnerships for Coinme, giving it access to over 40,000 physical locations worldwide. According to Neil Bergquist, there’s a Coinme kiosk within 5 miles of nearly 90% of the United States population.
“There are more Coinme cash locations than the largest private bank ATM networks or branches,” he says. “So you can actually use cash and buy crypto at more locations in the U.S. than you can deposit cash to the largest bank network ATMs.”
Beyond its physical footprint, Coinme is expanding crypto-as-a-service offerings, aiming to “crypto-enable” existing financial institutions through its enterprise API, Coinme-as-a-Service.
Since November 2022, Coinme has powered the crypto platform for MoneyGram Online, allowing its customers to buy and sell digital assets through the money transfer service’s app.
As the company looks ahead to the next decade, Bergquist envisions a world where Coinme’s crypto-as-a-service platform becomes the connective tissue between legacy finance and decentralized digital money.
“There’s a lot of opportunities to not only sit on your crypto as a long-term store of value, but potentially earn interest through different liquidity pools that exist in DeFi [decentralized finance],” he says, hinting at future use cases like crypto staking.
The institutional embrace comes as the crypto world is still reeling from a series of high-profile failures and scandals, from the implosion of…
Read More: Coinme CEO Neil Bergquist on Regulation & Bitcoin ATMs Making Crypto Safe