Coinme CEO Neil Bergquist on the Role of Physical Bitcoin ATM Locations in Digital Finance

Digital currencies like bitcoin are continuing to gain traction, and the importance of physical access points in this process might seem counterintuitive. Yet Neil Bergquist, CEO of crypto exchange Coinme, says these tangible gateways to the crypto world are crucial in bridging the gap between traditional and digital finance.

“There is a Coinme location within roughly 5 miles for 90% of the American population,” Bergquist points out, highlighting the company’s extensive network of over 40,000 locations across the United States. This ubiquity is part of a strategic approach to address some of the most pressing challenges facing cryptocurrency adoption: trust, accessibility, and ease of use.

Coinme, founded in 2014, has evolved from operating a handful of bitcoin ATMs to becoming a comprehensive crypto-financial services provider. The company’s journey mirrors the broader evolution of the cryptocurrency industry, marked by clearing regulatory hurdles, technological innovations, and shifting public perceptions.

Demystifying Crypto Through Familiar Channels

One of Coinme’s primary goals is to make cryptocurrency transactions as straightforward as traditional banking.

Bergquist explains[1] , “It’s the small things. Like verifying a bitcoin wallet address inputed by a customer before they attempt a send.

“When you go to our kiosk, you put in your phone number, it opens your account, you insert cash, and then the bitcoin is instantly available in your Coinme wallet,” he continues. “There is no QR code, there’s no scanning, there’s no sending it to a third party wallet at the time of purchase.”

Addressing Regulatory Concerns and Building Trust

In an industry that can be plagued by regulatory uncertainties, Coinme has made compliance a cornerstone of its operations.

“Coinme is a licensed and regulated financial institution, just like the other financial institutions you know and trust,” Bergquist says[2] . “We’ve implemented Know-Your-Customer controls per our AML/BSA program. We have controls and transaction monitoring in place including blockchain monitoring.”

This commitment to regulatory compliance has allowed Coinme to secure partnerships with major retailers and financial service providers, further legitimizing crypto in the eyes of mainstream consumers. However, the path to this point was far from smooth.

In the company’s early days, even basic financial services were hard to come by. Banks were wary to support a bitcoin exchange, let alone one that used cash as its predominant payment type. The challenges extended to practical operations, with early Coinme employees resorting to collecting cash from bitcoin ATMs personally due to the reluctance of armored car services to work with a crypto startup.

The Coinstar Connection

At the heart of Coinme’s strategy to make cryptocurrency accessible are its partnerships with two established players in the physical financial services space: Coinstar and MoneyGram. These collaborations have dramatically expanded Coinme’s reach, bringing bitcoin and other digital currencies to thousands of familiar locations across the United States.

In early 2019, Coinme announced a groundbreaking partnership with Coinstar, a company known primarily for its coin-counting kiosks in grocery stores and other retail locations. Rather than operate its own bitcoin ATMs, Coinme installed its API in existing Coinstar machines, marking a significant shift in the company’s approach.

“Why deploy crypto-specific ATMs when you can just crypto-enable all the existing financial infrastructure?” Bergquist muses.

This partnership allowed Coinme to rapidly scale its presence, growing from 70 locations to hundreds across the U.S. in a matter of months. By 2022, more than 7,000 Coinme-enabled Coinstar kiosks were operating in 48 states.

And the integration with Coinstar kiosks has been continually refined to improve the user experience.

In March of this year, the company announced that crypto purchases made at over 9,700 Coinstar kiosks will now be automatically and instantly loaded into users’ digital wallets without the need for a redemption code.

This seamless integration of digital currency purchases into a familiar, physical transaction — feeding cash into a kiosk at a local grocery store — has been key to Coinme’s strategy of normalizing cryptocurrency for mainstream consumers.

MoneyGram: Expanding the Network

Building on the success of its Coinstar partnership, Coinme announced a collaboration with global money transfer company MoneyGram in 2021. This partnership further expanded Coinme’s physical footprint, enabling users to buy and sell bitcoin at approximately 20,000 MoneyGram locations.

In January 2022, MoneyGram acquired a 4% stake in Coinme, signaling a deeper commitment to integrating cryptocurrency services with traditional financial systems.

These partnerships have been instrumental in addressing several critical barriers to cryptocurrency adoption:

“There are more Coinme cash locations than the largest private bank ATM networks,” Bergquist points out. This ubiquity makes it easier for curious consumers to dip their toes into the crypto waters.

Integrating with well-known brands like Coinstar and MoneyGram has also enabled Coinme to build on existing consumer trust.

“The reason why we’re in the largest grocery retailers in the U.S. is because we’re legitimizing crypto and making it safer. We de-risk it as best we can, and that’s why we’ve earned these partnerships,” Bergquist explains. “We want to make the cash-to-crypto buying experience as simple as possible.”

Physical Locations in a Digital Future

While cryptocurrency is inherently digital, Coinme’s success with these partnerships underscores the ongoing importance of physical touchpoints in driving adoption. Bergquist notes, “A lot of people don’t realize how everyone uses money … The majority of our customers make less than $80,000 a year. And the way they use money is very different than someone who reads the Wall Street Journal for example.”

For many consumers, the ability to interact with a physical machine, use cash, and conduct transactions in familiar retail environments provides a sense of security and tangibility that purely digital platforms may lack. As Bergquist puts it, “We literally had customers back then say, ‘Well, I know you’re not going to steal my money, because if you do then I’m going to steal your machine.'”

Moreover, these physical locations serve an educational function, acting as visible reminders of cryptocurrency’s growing mainstream acceptance. They provide a low-pressure environment for curious individuals to learn about and experiment with digital currencies.

“We just want to make bitcoin accessible,” says Bergquist. “A lot of people hear about it at a social gathering, but that doesn’t mean they can go buy it right then and there. You need to have a way to access and buy it. We’ve helped solve that problem through our ubiquitous retail footprint.”