Seattle startup Coinme raised $1.5 million to fund the growth of its cryptocurrency ATM network in the U.S. and internationally. The fresh cash, which is the first wave of a newly opened Series A round, comes from Xpring, a developer initiative from Ripple that invests in cryptocurrency startups, as well as the Blockchain Finance Fund.
Coinme CEO Neil Bergquist said the 25-person company will use the money to acquire licenses in 21 additional states. In January, Coinme joined forces with Coinstar to let people purchase cryptocurrencies with cash. Once Coinme has acquired additional state licenses, it can “turn on” the ability to buy cryptocurrencies at Coinstar kiosks in those states.
“We have a global market opportunity, an early lead, and now is the time to scale,” said Bergquist in an email. The new financing is in addition to $3 million in convertible debt that the company raised previously.
Cryptocurrency ATMs have become a popular tool for fraudsters and money launderers. Bitcoin ATMs were used as part of a money-laundering scheme in Spain, and police in Vancouver, B.C. called such machines “ideal” vehicles for money laundering.
Bergquist said the company has secured state licenses for financial institutions, implemented controls, and undergone tests including an anti-money laundering audit. “I’m pleased to say we’ve passed every time,” he said. “The majority of the cryptocurrency ATM operators in the U.S. are unlicensed which we believe is a short-term strategy.”
After peaking near the end of 2017, the price of bitcoin fell dramatically throughout 2018. The cryptocurrency mounted a recovery this year and currently sits at $10,335 per bitcoin.
Despite the hurdles, Bergquist remains optimistic. “Soon people will be utilizing digital currencies and not even know it, whether it be through a peer-to-peer remittance app or as a result of their financial institution storing their dollars as a digital asset on a blockchain so it can be moved 24/7, instantly and freely,” he said. “As infrastructure companies like Coinme help digital currencies ‘cross the chasm,’ adoption will continue at an accelerated pace.”
