Bitcoin ATM Market Is Undergoing 'Necessary Correction,' CoinFlip Founder Daniel Polotsky Says

Cryptocurrency ATMs typically lack options. Most only allow customers to trade cash in for Bitcoin BTC/USD.

That’s not the case with CoinFlip, the Chicago-based startup founded by 29-year-old Daniel Polotsky.

In addition to Bitcoin, CoinFlip offers Ethereum ETH/USD, Litecoin LTC/USD, Dogecoin DOGE/USD, Stellar Lumens XLM/USD, Chainlink LINK/USD, Pax Gold PAXG/USD, USD Coin USDC/USD, and Tether USDT/USD, Polotsky tells Benzinga.

Read on for Polotsky’s thoughts on the dwindling number of ATMs, M&A, venture capital and CoinFlip’s global aspirations.

Benzinga: Does the declining number of Bitcoin ATM machines concern you?

Polotsky: I’m not concerned about the declining number of Bitcoin kiosks. It seems like many companies are working to optimize their operations, and some actors that weren’t managed well or didn’t comply with regulations are closing down. This might mean fewer ATMs overall, but those that remain are likely to offer better consumer protection and a higher-quality experience. At CoinFlip, for example, we prioritize consumer support with our 24/7 customer service, which sets us apart from others in the market.

While there may be a reduction in ATMs in North America due to these adjustments, global demand for Bitcoin ATMs remains strong. This suggests to me that the market is undergoing a necessary correction rather than indicating a lack of interest in cryptocurrency services. This is a positive step towards a more robust and compliant environment.

BZ: Coin Cloud went bankrupt; Genesis Coin picked up the pieces. Is the crypto ATM space ripe for consolidation?

The crypto ATM space has been undergoing some consolidation.  Genesis Coin stepping in to acquire a substantial portion of Coin Cloud’s ATM network after it declared bankruptcy underscores this trend.  

Operating these machines amidst fluctuating cryptocurrency prices, high operational costs, and evolving regulations in the crypto space certainly contributes to a challenging environment but it also presents opportunity.  With smaller operators struggling to maintain profitability, larger players with more robust infrastructures are increasingly acquiring their networks. 

We're always exploring strategic opportunities to expand our footprint and product offering, including M&A. However, any decision to pursue acquisitions would depend on market conditions and the strategic value of potential targets. As regulations continue to form, we might see more smaller operators end up in a similar situation as Coin Cloud. We invite operators that are in that position to reach out. CoinFlip's focus remains on sustainable global growth and innovation in the ATM space and beyond.

BZ: What is CoinFlip Ventures and when did it launch?

CoinFlip Ventures launched in July 2022 with a $1 million fund to support early-stage startups in the crypto space.  The initiative focuses on DeFi, NFTs, tokenization, and other blockchain innovations.

Some current and potential notable investments include Domination Finance, a decentralized derivatives market where users can bet on a new financial instrument — dominance trading; Function03, a company that is working on labeling the wallets on the blockchain and building essential ecosystem infrastructure; Hopscotch, a messaging app for marketplace deals which helps prevent fraud, increases sales, and allows users to pay with crypto to settle transactions; Koii Network, a decentralized physical infrastructure network that pays users for their device's compute power; and Entertainmint, a streaming, ticketing, and distribution platform where users can fund their favorite creators' show ideas to ensure they get made.

BZ: What inspired CoinFlip to look to New Zealand as a key market and become its first crypto kiosk operator?

The same fundamentals that made us the world's largest crypto kiosk operator by transaction volume enable us to succeed in promising, new markets like New Zealand. Being first to market gives us a competitive edge. It establishes CoinFlip as a leading player in the cryptocurrency space in New Zealand while attracting customers who are eager for alternative avenues into the digital sector that are also secure.

Another significant factor is New Zealand's banking landscape. Kiwis have fewer banking options compared to the U.S., creating a more rigid financial system that limits how people can handle their currency. This kind of environment tends to create a demand for alternative financial solutions, making the option to buy crypto with cash particularly appealing. Our services provide greater financial flexibility and opportunities, filling a gap in the market.

BZ: What’s next for CoinFlip?

We're eager to explore new ways to meet our customers where they are. We are well on our way to establishing a global network of crypto kiosks, positioning ourselves not only as a facilitator of cash-to-crypto transactions but also eventually as the go-to platform for global remittances, bill pay, U.S. tokenized assets, and a cash on-ramp for a variety of services like online gaming/ticketing. We're also broadening our services for high-net-worth individuals and institutions through CoinFlip Preferred, a white glove service for customers who wish to trade higher amounts via bank transfer.

CoinFlip Preferred provides consumers with same-business-day settlement, superior pricing, and deep liquidity access to buy/sell/swap cryptocurrency. Additionally, we plan to enhance our online capabilities via our mobile wallet and allow for more convenient purchases using methods like ACH and debit/credit cards.

Stay Tuned: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on Nov. 19.

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