How Coinme Became a Regulated Crypto Exchange With More Than 40,000 Bitcoin ATMs

When Neil Bergquist first learned about bitcoin in 2013, he was struck by its potential to upend the existing financial order. 

“Bitcoin was so disruptive for existing financial institutions,” says Bergquist, the co-founder and CEO of Coinme, one of the largest cash-to-crypto exchanges in the United States. "It looked like the incumbents were never going to touch it."

A decade later, Coinme has surpassed $1 billion in cumulative retail sales, powering a network of over 40,000 physical locations across the U.S., and has partnerships with established brands like Coinstar and MoneyGram. Its success mirrors the mainstreaming of bitcoin and crypto. It’s not a revolutionary overthrow of finance; its an integration into the existing financial services ecosystem.

"We founded Coinme in 2014 because we believed in the power of crypto to help people improve their everyday financial lives," Bergquist said in a statement. "New technologies and asset classes are usually only available to a select few. True to the servant ethos of bitcoin, we're pleased to have made bitcoin accessible for all."

The Seattle-based company has grown rapidly, achieving an average yearly revenue growth rate of 164% since inception. It has raised $35 million in funding from investors like Pantera Capital, Digital Currency Group, Coinstar, Ripple, and Circle. In January 2022, MoneyGram took a 4% stake in Coinme, building on an existing partnership.

"We've weathered many market cycles and are proud to emerge from the recent bear market profitable, growing quickly, and marking a decade of providing dependable retail access to crypto,” said Bergquist.

Mainstream Adoption

In the 10 years since Coinme’s founding, the public profile of bitcoin has exploded, evolving from a little-discussed, decentralized, antiestablishment method of conducting financial transactions to a major asset embraced by banks, investors, and payment companies. Bitcoin has found mainstream adoption not as an unregulated alternative to money, but as a sort of “digital gold,” an investable store of value and medium of exchange.

The key to Coinme's proliferation has been navigating the age-old conflict between security and accessibility. Bitcoin's core innovation is removing the need for trusted third parties and centralized authorities to verify transactions, instead verifying them through complex cryptographic puzzles solved across a decentralized network of computers, or nodes. But that level of decentralization makes it intimidating for everyday users unfamiliar with concepts like cryptography, blockchains, and unhosted digital wallets.

"The way bitcoin ATMs or bitcoin kiosks traditionally operate is they ask you where you want to send your bitcoin, and you have to enter in a wallet address," Bergquist explains. "For people buying bitcoin for the first time, they’re prone to ask themselves, 'Well, what is a wallet? What is a wallet address?’ You have to download a third-party app that is a bitcoin wallet, scan that wallet, send it to that wallet, and the whole process is just confusing."

Coinme's key insight was abstracting away that complexity. When users buy crypto at one of its bitcoin ATMs, they can pay in cash, and the digital assets are automatically loaded into their Coinme wallet, no QR codes or third-party downloads required.

"It feels more like a bank deposit experience," Bergquist says. 

Regulation and Security Protocols

Bergquist wants to make cash-to-crypto transactions easy, familiar, and safe. Coinme adheres to know-your-customer guidelines and implements anti-money laundering protocols and blockchain monitoring.

"Coinme is a licensed and regulated financial institution, just like the other financial institutions you know and trust," Bergquist says. “Coinme and other regulated exchanges and wallets follow these protocols, which makes crypto safer."

Credible regulation has been essential for bringing crypto into the mainstream and attracting institutional adoption. Coinme's licenses and compliance program have helped it establish partnerships to integrate its cash-to-crypto services into existing financial infrastructure, like Coinstar's kiosk network in grocery stores and MoneyGram's retail locations.

‘User-Friendly Access’

While cash is subject to geography and various jurisdictions, requiring navigating a maze of domestic and cross-border financial regulations, bitcoin is natively global and portable. Intermediaries like Coinme can provide the on-ramps and off-ramps between local fiat currencies and crypto.

"We want to make the cash-to-crypto buying experience as simple as possible. Automatically loading crypto to the Coinme Wallet after purchasing it at a Coinstar kiosk makes it more streamlined than ever for both the first-time and experienced crypto user," said Bergquist in a recent statement on the company’s launch of increased purchase limits at many locations of up to $9,500 in crypto daily and $60,000 in crypto monthly for cash transactions. 

"Now the purchase is linked directly to the customer's mobile phone number and loaded into their Coinme wallet, all before they leave the grocery store.”

Some of that user growth has been driven by the unique needs of the unbanked and underbanked. Bergquist sees bitcoin ATMs as a useful tool to protect against currency debasement and the high costs of traditional remittances for those who need to send money overseas.

"There’s over $50 billion a year of cash that's sent from the United States to Latin America, and that's cash-to-cash, which is surprising," he explains. "Now you can put that cash into a Coinme location, get crypto and send that crypto nearly anywhere in the world within a few minutes."

Bitcoin's lack of need for intermediaries gives it a transaction cost advantage for remittances over those serviced by traditional wire services. But intermediaries like Coinme still play an important role, acting as trusted custodians that marry the advantages of crypto's decentralization with regulatory compliance.

"Financial systems traditionally are built as closed-loop systems, but crypto is an interoperable system, like the internet. If you have access to the internet you generally have access to crypto," Bergquist says. “If you broadcast a bitcoin transaction to the blockchain, the blockchain doesn’t care who you are, where you live, or what company you used to submit a transaction. And that's the beauty of an open financial system.”