Bitcoin ATMs were (and still are) the most tangible and literal implementation of cryptocurrency.
They moved the process of buying and selling cryptocurrencies from abstract acts performed on a screen to the real world, allowing people to buy Bitcoin without requiring authentication, bank accounts, or any real understanding of how custody works.
Scan the QR code, insert a few banknotes, and all the BTC you can afford will be deposited into your cryptocurrency wallet in a few minutes.
For a while, the physical aspect of buying cryptocurrencies with cash gave Bitcoin something you couldn’t get on exchanges: the feeling that Bitcoin was part of everyday life.
Bitcoin Depot, once the largest Bitcoin ATM operator in North America, filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on May 18, taking its entire network of approximately 9,700 machines offline.
Revenue for the first quarter of 2026 was already down 49.2% year over year, or $80.7 million, and gross profit was down 85.5%, from $31.2 million to just $4.5 million.
The company’s profit of $12.2 million a year earlier turned into a net loss of $9.5 million, which CEO Alex Holmes said was exacerbated by a business model he described as “unsustainable.” The application affects the company’s Canadian subsidiary, which is under court supervision, and other international operations have been ordered to wind down under local law.
as crypto slate It was reported earlier this month that Canadian authorities had already proposed a complete ban on crypto ATMs, which officials said were a major conduit for fraud and money laundering. This decision marks a fairly sharp political shift towards treating access to Bitcoin as a liability. The collapse of Bitcoin Depot shows what can happen to business models while regulators are still making their case.
How Bitcoin ATMs made virtual currency physical
Bitcoin ATMs became popular by solving a concrete problem. Just a few years ago, cryptocurrency exchanges were much slower and clunkier than they are today. Depositing funds to a US exchange required a wait time, which felt unreasonably long for an asset built with a block time of around 10 minutes.
Machines in corner stores and gas stations have bypassed all the hassle of authentication and waiting times, reducing the entire process to a simple cash transaction that anyone can complete.
You could even say that the main product of these ATMs was convenience rather than BTC. For the sake of convenience, people were willing to pay exorbitant fees of 10% to 30% per transaction, a premium that essentially no financial service could bear, but ATMs countered by sheer immediacy.
However, irreversibility was the main structural weakness of that model. If a bank customer falls victim to fraud, the fraud desk can dispute the charge and recover funds. Once a Bitcoin ATM transfers funds to a wallet controlled by a fraudster, the transaction is settled on the blockchain and remains there forever, with no power to reverse it.
Telephone-based social engineering campaigns to coach elderly victims through ATM transactions have become a documented pattern in multiple states, and it is the scale of these losses that ultimately gave regulators both evidence and political cover.
The FBI recorded 13,460 cryptocurrency kiosk fraud complaints in 2025 alone, with reported losses amounting to $389 million, a 58% increase from the previous year. Approximately $257.5 million of this amount was accounted for by adults over 60 years of age, and the damage is concentrated among those who have sufficient electoral power to sustain the repression politically.
Access to cryptocurrencies has also changed, and ATMs have steadily become less convenient. By 2025, spot Bitcoin ETFs will be a standard part of standard brokerage accounts, fintech apps will greatly simplify cryptocurrency onboarding, and stablecoin rails will expand the ways people can hold digital assets without enduring price fluctuations.
ATM fee premiums were difficult to justify compared to cheaper and more available alternatives, and users who remained most reliant on cash kiosks were the most exposed to fraud.
Compliance killed ATM profitability
California was the first state to oppose Bitcoin ATMs. The Digital Financial Assets Act capped daily transactions at $1,000, capped fees at the greater of $5 or 15% of the transaction amount, and required written disclosure before proceeding with a transaction.
A California court upheld the daily cap in 2024, and the fee and disclosure rules went into effect in 2025. For carriers modeled on high fees and large cash exchanges, this has compressed revenue per user while increasing compliance overhead, attacking margins from both directions simultaneously.
Regulatory pressure on Bitcoin ATMs then quickly exceeded the fee cap. Indiana adopted a complete ban in March 2026 when nearly 900 ATMs were in operation in the state, Tennessee’s ban is scheduled to go into effect on July 1, 2026, and Minnesota similarly approved its own ban.
As of April, 20 states had enacted new laws restricting cryptocurrency ATM activity, according to the American Bankers Association, and many others have bills pending.
The coercive measures that ran parallel to these legislative measures were equally harmful. Iowa’s attorney general sued Bitcoin Depot and CoinFlip in February 2025, alleging that the companies caused state residents more than $20 million in damages, with a state fact sheet reporting that 98.16% of the funds sent by Iowans through Bitcoin Depot were tied to fraudulent transactions.
Massachusetts filed its own lawsuit against Bitcoin Depot in February 2026, and the attorney general’s office said data showed more than half of the company’s revenue from Bitcoin ATMs in the state was fraud-related. The state of Maine has reached a $1.9 million settlement to compensate residents who suffered losses through Bitcoin Depot kiosks between 2022 and 2025.
The state of Connecticut suspended the company’s money transfer license in March 2026, citing overcharging, failure to provide refunds, and public safety standards serious enough to warrant emergency action.
By the time of its Chapter 11 filing, the company had obtained more than $20 million in legal judgments in the fourth quarter of 2025 alone, and a cyberattack in April had drained an additional $3.7 million from its cryptocurrency wallets.
This build-up of pressure is the sad paradox of Bitcoin ATMs. Layering protection on transactions makes them less likely to harm users and makes machines more expensive to run.
Mandatory ID checks, blockchain analysis requirements, transaction holds, written warnings, refund rights, fee caps, daily limits, state license renewals, litigation reserves, etc. all pile up against a product that was profitable simply because it was fast, loose, and cash-first.
Add enough of these requirements and the convenience premium turns into a compliance trap with no exit. Access to Bitcoin is now moving to an infrastructure built around regulation. ETFs, custodians, licensed exchanges, and payment apps have absorbed the retail penetration function once held by Bitcoin ATMs.
ATMs were the first real door to cryptocurrencies, but they only worked if the doors were rare and hard to find. In 2026, when the average American could get their hands on Bitcoin in minutes through a regular brokerage account, Bitcoin ATMs ran out of things that only they could do.
(Tag translation) Bitcoin
