Home / Bitcoin / Coinsource with its NYC BitLicense concessions, Bitcoin ATM and Crypto Regulations

Coinsource with its NYC BitLicense concessions, Bitcoin ATM and Crypto Regulations

In November 2017, the world's largest Bitcoin ATM network obtained the much-desired virtual currency license from the New York Department of Financial Services, becoming the ninth company to do so.

Coinsource fired for this license from the summer of 2015 and worked mainly under a temporary license. The newly issued "BitLicense" gives the holder the right to conduct virtual currency activities within the issuing state. Coinsource joins a list of some fairly influential companies like BitFlyer, BitPay, Coinbase, Circle and Square to keep this license.

ATM Coinsource

With over 200 machines in 19 states, Coinsource has played a significant role in providing traditional users with access to cryptocurrency in convenient locations such as service stations. These machines allow customers to enter fiat and buy bitcoins to keep in their mobile wallet, as well as sell bitcoins for fiat scanning their mobile wallet.

On the one hand, Coinsource has helped to spread and simplify cryptocurrency for thousands of people. Seeing a Bitcoin ATM (sometimes called BTM) next to a full Redbull freezer and shelf with Slim Jims lends a sense of reassuring familiarity to a relatively too high-tech concept for the average person.

On the other hand, Bitcoin ATM suppliers received their fair sharing of criticism to charge exceptionally higher commissions and premiums for their services. ATMs range between 6% and 10% of the premium on the price of a Bitcoin, while Coinbase, a digital exchange, is also burned for its extremely high commissions, at a cost of 3.99%.

With the rapid growth of Bitcoin ATMs across the country, Coinsource is positioned to become a dominant force in getting an accelerating growing population on board as people take steps to buy their first bitcoins. Second CoinATMrader.com, the number of ATM Bitcoins was up 4% every period. Of the 3931 machines in October 2018, Coinsource has a market share of about 5.1%, which seems to be sufficient to hold the market of the "largest Bitcoin ATM network".

CoinCentral collaborated with Coinsource Sheffield Clark's managing director and legal advisor Arnold Spencer. To enjoy!

Coinsource has just received "Bitlicense" from the New York State Department of Financial Services (NYDFS). Can you tell us something more about what Bitlicense is and what does this result mean for Coinsource?

Sheffield Clark: The "Bitlicense", more recently known as the "Virtual Currency License", is a commercial license for virtual currency assets issued by the Department of Financial Services of the State of New York (NYSDFS) on the basis of specific regulations for companies operating in the 39, inside the state. The granting of this license is a huge victory for Coinsource, as well as an approval mark that allows potential partners and users to interact confidently with our products and services. In the next 180 days, we plan to triple our presence in the state of New York.

Arnold Spencer: Receiving Bitlicense means that Coinsource has a much lower regulatory risk. We now have a structure on which we know we can operate in New York. During the application process, we faced the possibility that New York would establish certain requirements that we could not meet or that we would have to limit our business model in order to paralyze our company. We now have standards for compliance and a constructive and open dialogue with our regulators.

Furthermore, interactions with other companies, both cryptographic and traditional, are easier with Bitlicense. Banks and, above all, banking supervisors consider Bitlicense an additional level of comfort with the security and soundness of our company. Hardware manufacturers and software programmers know that we are regulated by NYDFS and respect it.

Bitlicense also provides us with credibility while interacting with other regulators. As we expand into new jurisdictions, we have the momentum of the New York license, as well as all the policies and procedures we have created during the Bitlicense application process. We anticipate that we will be more favorably welcomed into these new markets because of our success in New York.

Obtaining Bitlicense required that the Coinsource be subjected to strict compliance checks by the NYDFS. Can you explain how the ATM Coinsource Bitcoins ensure that machines are not abused, hacked or used for illegal activities? What kind of checks and controls does Coinsource do on ATM users to ensure compliance?

Sheffield Clark: Because Coinsource is a nationally licensed company and a federally regulated company, we take KYC / AML compliance very seriously. All Coinsource ATMs require ID checks, phone numbers and more. We do not share or sell any information to third parties of any kind.

With so many online exchanges now available, can you tell us something more about Coinsource's long-term goals as a company focused on physical ATMs? How your business model aims to compete in a sustainable way with, e.g. Binance, Coinbase or Bittrex, especially since users need to register online before using an ATM Coinsource?

Sheffield Clark: Bitcoin ATMs will continue to have similar appeal for the same reason that regular ATMs do: they are more direct and accessible. Most people with a random interest in cryptocurrencies do not want to jump through the connection circuits of a bank account, waiting for a payment order to be transferred, monitoring price charts, making purchase orders, etc. We offer the simplest access to bitcoins at a competitive rate.

Do you have any usage statistics to share with us that could be interesting for our readers? For example, how many users of ATM Coinsource, average transaction value, most popular position?

Sheffield Clark: I would say that the most interesting data point is that we are the world's largest bitcoin ATM operator in the world. Unlike all our competitors, who must use third-party software integration on existing machines, we offer a complete stack service with proprietary software, hardware and customer support.

One of the blog posts on your website talks about how cryptocurrencies are an unbanked solution. How does Coinsource play in this solution? What services can the company offer to the unbanked of the United States?

Sheffield ClarkIn other words, for those who have been stranded in the United States and, eventually, abroad, a bitcoin ATM that takes physical cash is the most direct way to access the new global financial system. Bitcoin ATM networks provide a resource for value stores that do not discriminate based on socio-economic history.

Can you tell us about future plans for implementations in other countries outside the United States? Which countries will Coinsource target and why?

Sheffield Clark: We understand that the attractiveness of ATMs for cryptocurrency is universal and therefore it is certainly open to the idea of ​​expanding our coverage in the future. However, for now our main objective is to ensure that Americans of all 50 states have easy access to bitcoins.

What is your target market? Is there a large non-rented population in the United States?

Sheffield Clark: Although a sizeable minority of Americans remains stapled or undervalued, our product is aimed at consumers of all demographic sectors who want a simple and affordable option to purchase bitcoins.

What are some of the biggest challenges that projects like Coinsource will have to overcome in the near future?

Arnold Spencer: International regulatory markets represent a challenge for all cryptic companies. The challenges are complex because the regulations vary from country to country and each country has an evolving and evolving regulatory landscape. Some jurisdictions are trying to attract encrypted companies while maintaining low regulatory barriers. But cryptocurrency is a world market and a product without borders. From our point of view, companies will have to comply with the most restrictive regulations to operate successfully all over the world. Mere compliance with regulations for Malta or the State of Georgia will not allow companies to enter major markets such as New York, Tokyo and London.

The Coinsource transaction fee is substantially more than other exchange platforms. What value does a Bitcoin ATM offer to justify this amount?

Sheffield Clark: Bitcoin ATMs differ from trade in many ways. With exchanges, there is no possibility to make an immediate sale of coins, and on most trades, there is not even immediate purchase. The exchanges, as well as most of Bitcoin ATM's competitors in Coinsource, charge further processing fees in addition to exchange fees. We do not.

Exchanges also require extensive banking and credit / debit card information from their customers, while Coinsource only requires proof of identity in accordance with state and federal banking regulations. Finally, our rates are among the lowest in the Bitcoin ATM sphere, allowing the non-subscriber, underbanked buyer and even a first-time bitcoin to reach one of our kiosks, place money and buy and immediately own bitcoins.

What aspect does the relationship have with a company office? Do they keep the machines? Receive a portion of the revenue?

Sheffield Clark: Coinsource owns and manages all aspects of their Bitcoin ATM products and services. From 7-day customer support, to cash-in-hand collection and delivery services, to the installation and maintenance of the machine, store owners and employees who host Coinsource Bitcoin ATMs do not have to lift a finger. a turnkey business model where they receive a check each month to accommodate a 2 foot x 2 foot space and an electrical outlet. Both companies also benefit from a substantial increase in pedestrian traffic and sales.

While it seems that any project offering services / products somewhere in the financial supply chain would need one, few teams have a general legal advice. Could you elaborate on the role of General Counsel in a blockchain project?

Arnold Spencer: I handle all legal and compliance issues for Coinsource, working closely with our CEO and our CCO. These responsibilities include extensive strategic planning issues, such as the development and implementation of our proprietary compliance program or the consideration of strategic growth strategies based on legal issues in various jurisdictions. And responsibilities also include more traditional legal issues, such as employment contracts and human resources issues.

Coinsource decided upon its foundation that we would create a culture of conformity, that the company would include work within the legal and regulatory framework as the principle of its mission. This was relatively unique between cryptocurrency and blockchain. Many of the entrepreneurs in this space are mainly focused on innovation and disruption, which can be valuable. But there are often gaps between these new business models and current regulatory compliance schemes. As a General Counsel, I make sure that our creativity complies with the law.

How would you contradict the fact that Bitcoin, or rather private coins like Monero / Zcash, will facilitate illicit activities on a large scale?

Arnold Spencer: The criminals engaged in illegal behavior long before the emergence of legal currencies, no less than cryptocurrencies. The advocates of cryptocurrency have never claimed that this was a solution to criminal activity, but rather that cryptocurrencies had enormous advantages over physical and legal currencies. One of these advantages is that cryptocurrency transactions can be plotted on their blockchain.

We are already seeing the forces of order to adopt sophisticated blockchain strategies to investigate and prosecute the criminal activity that uses cryptocurrencies. So we see a trend towards the generalized adoption of Bitcoin between law-abiding companies and individuals. There is no doubt that criminals will try to use privacy coins for illicit activities, but this simply puts these coins at the same level of cash.

Thank you!

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