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Wave of New Ohio Bitcoin ATMs Expose Potential Law Weakness

There is a concern that Bitcoin machines could be used for money laundering, experts say, as Northwest Ohio has become one of the United States' largest concentrations of Bitcoin dispensers.

bitcoin ATM
(TNS) — Toledoans might have noticed when they go out to buy gas, cigarettes, or energy drinks that suddenly, they can buy Bitcoin as well.

Companies like Cash2Bitcoin, Coin Cloud, and Lamassu are industry leaders in a niche of the crypto-currency revolution — the cash-to-Bitcoin automated teller machine.

These kiosks make it possible for customers to purchase up to $5000 in Bitcoin in cash without an identification card or bank account. And Toledo is full of them.

Northwest Ohio has one of the United States' largest concentrations of Bitcoin dispensers. Cash2Bitcoin has 20 machines in Ohio, with one in the Cleveland area and the 19 others in northwest Ohio. Thirteen are within 12 miles of One Government Center. And this is just one vendor.

On Cash2Bitcoin's website, store owners are able to fill out an interest form. Potential hosts for the machines are assured the company will pay for the machines' upkeep, that the machines will drum up business, and that the machines could help grow Bitcoin itself. The most lucrative part: the vendor will pay store owners just to host a machine.

Richard Hady of West Toledo — who runs two meetup groups where Toledoans come to talk crypto — said he and other crypto traders are familiar with these machines and have used them before. He said that while there is not much regulation of Bitcoin, the "Know Your Customer" policies that traditional financial institutions have to follow now apply to crypto transactions above a certain threshold.

Mr. Hady added that privacy-conscious Bitcoin users can use peer-to-peer exchanges, or they can go to one of the cash-to-Bitcoin ATMs sprinkled around northwest Ohio.

There is a concern that Bitcoin machines could be used for money laundering, University of Toledo professor Eric Chaffee said.

Mr. Chaffee, who has written extensively about cryptocurrencies, cyber security, and the law, said one aspect of illegal activity is the generation of lots of cash, which can make crime detectable in a way it otherwise would not be.

"One of the aims of Bitcoin and other cryptocurrencies has been to render financial transactions anonymous and to create an environment where people can engage in financial behavior without the concern of government oversight," Mr. Chaffee explained. "That being said, Bitcoin is not an ideal way of conducting money laundering. If you have enough computing and police power, you can figure out how to go about tracking down the people involved."

Ultimately, Mr. Chaffee said, even if a customer were to buy $4,000 worth of Bitcoin at an ATM — an amount below the $5000 threshold for KYC rules, meaning it does not require identification or a bank account — the transaction would still be tied to a Bitcoin wallet and, with enough computing power, the purchase's origin could still be tracked down.

Government and law enforcement, however, must have the will and resources to pursue it.

Steven Irwin, a spokesperson for Ohio Attorney General David Yost, said that office is not currently pursuing enforcement for Bitcoin transactions. The Toledo Police Department declined to comment.

"We're at a sweet spot, with Bitcoin ATMs, they are a means of conducting criminal activity in a relatively anonymous way and unless you have law enforcement with the resources; the government is outmatched," Mr. Chaffee said. "Certainly the government in Ohio should be doing more to catch up with how this technology functions."

© 2021 The Blade (Toledo, Ohio). Distributed by Tribune Content Agency, LLC.