Would you invest in a bitcoin startup who places ATM BTC machines in US cities?

[CoinATM]

I have registered with a couple of the bitcoin lending sites and am waiting for my validation to complete.  In there interim I was wondering if anyone here might want to talk bitcoin startup.  (edit: This is not a request for a loan, just a discussion)

I put up a poll in the newbie section:

Would you use an ATM machine to buy Bitcoins?
Yes   - 26 (83.9%)
No   - 0 (0%)
Maybe   - 5 (16.1%)
Total Voters: 31

https://bitcointalk.org/index.php?topic=286114.0


My business partner has been programming ATM machines for years.  We are highly confident we can use a state of the art "money recycling" ATM machine to sell bitcoins directly to the public.  We are both in Colorado and so, naturally, we'd like to place the ATM machine in Denver.  Denver is the state capital and largest city in Colorado.  The state is home to 5 million people and more than 57 million visitors throughout the year.

We have permission from a busy retail chain store owner to place ATM machines on his properties.  
We have the skills to manage the project.  

What we are seeking is a 6-12 month loan to purchase a few ATM machines and test the concept.  The ATM machines, which hold their value well, become the collateral for the loan.

We would purchase a "SelfServ" model with a "cash recycler"  from this product line: http://www.ncr.com/products/banking/atm-machine

We will be seeking 150 BTC to start and will pay a fixed interest rate each month until the loan is paid in full.  

September 2, 2013:
At the moment this is not an offer to enter a loan agreement but an exploration of interest in the idea.  We are not seeking lenders right now but we would like to start conversations with anyone who might be interested or have questions.

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[CoinATM]

notes:

-Need competent council to determine what laws apply and how to avoid breaking them.

[Kouye]

No.
Scams involving third-party secure private (but deleted right away, promise!) key generation are getting old, now.

https://bitcointalk.org/index.php?topic=278220.0

This is one of the latest examples. I'm afraid this kind of business has no future.
Bitcoins are supposed to go to one peer to another.

No trusties in the middle.

[CoinATM]

How else can bitcoin be distributed? (Through a kiosk / machine).  I was thinking the private key distribution made sense. 

You could have the BTC sent to a wallet but you'd need to tell the machine your wallet address.

If you are suggesting that the owner of the machine (me) would scam because owner of the machine (me) knows the private key I think it's unlikely given the enormous expense of the machine and installation.  If it cost me $20k to put the machine in a location and I scammed the first user and they reported that here in the forum I would never recover my investment, so I think it's unlikely the machine operator would steal.  Right?

 

[DeathAndTaxes]

How do you plan on dealing with the regulatory issues?  How do you plan on identifying and verifying customer identities.  The tech is trivial, the laws/regulations not so much.  If you intend to just operate above the law, well consider how incredibly easy it is to seized an expensive public fixed asset like an ATM.

[Kouye]

How else can bitcoin be distributed? (Through a kiosk / machine).  I was thinking the private key distribution made sense. 

Why would bitcoin need to be distributed through a kiosk/machine?
Why having a portable wallet device holding the private keys you chose to upload to it wouldn't be enough?

[CoinATM]

How do you plan on dealing with the regulatory issues?  How do you plan on identifying and verifying customer identities.  The tech is trivial, the laws/regulations not so much.  If you intend to just operate above the law, well consider how incredibly easy it is to seized an expensive public fixed asset like an ATM.

First, we don't intend to operate outside the law.  I am unaware of any law that requires a "seller of bitcoin" to do anything special.  I am aware of MSB laws but I am not sure they apply unless I am selling bitcoin that I mine or buying and selling like an exchange.  

As only a seller of "numeric codes" I'm not sure what regulations specifically apply.  FWIW these are the kind of questions we need to address before we launch so I really appreciate you asking.  


I agree the tech is trivial.  In my mind it's no different than an automatic movie ticket vending machine I see at Fandango theaters, except we won't accept credit cards ;-)

Why would bitcoin need to be distributed through a kiosk/machine?

It does not, obviously since you and I have bitcoin and we have never used such a machine.  My poll in the newbie section, however, demonstrates people are interested in using such a device.  

[DeathAndTaxes]

Your selling Bitcoins.  MSB regulations apply.  Depending on the exact business model and the wording of state laws money transmitter requirements in one or more states apply.  It is a very complicated issue and likely will require legal counsel.

Not sure why you conditioned your explanation with "like an exchange".  By FinCEN's guidance if you are exchanging BTC for USD or USD for BTC then you are a money service business.

[quote[As only a seller of "numeric codes" I'm not sure what regulations specifically apply.[/quote]

Most US dollar are simply numeric codes.  That isn't much of a legal defense for anything.

[CoinATM]

Only because the only action I'm aware at the federal level was the Mt Gox seizure and I assume the problem there was they are acting as an exchange.  I'm not a lawyer and I recognize the need for one.  

Other than filing as an MSB what do you think we'd need to do?  (And what do we need to do as an MSB?)

[DeathAndTaxes]

Only because the only action I'm aware at the federal level was the Mt Gox seizure and I assume the problem their is they are acting as an exchange.  I'm not a lawyer and I recognize the need for one. 

Other than filing as an MSB what do you think we'd need to do?  (And what do we need to do as an MSB?)

Comply with the Bank Secrecy Act.  At a minimum know your customers, collect identitifcation, record transactions, report suspicious transactions to FinCEN and develop an AML program.

[CoinATM]

Comply with the Bank Secrecy Act.  At a minimum know your customers, collect identitifcation, record transactions, report suspicious transactions to FinCEN and develop an AML program.

If Walmart doesn't need to check ID when selling prepaid visa's, surely a machine can do the same, right?

Can't I just adopt the same policy Walmart uses where they don't check ID up to $300 per day per person?

[Vod]

If Walmart doesn't need to check ID when selling prepaid visa's, surely a machine can do the same, right?

Can't I just adopt the same policy Walmart uses where they don't check ID up to $300 per day per person?

Asking for investments/loans seems a bit premature until you get your legal act together.

[CoinATM]

Asking for investments/loans seems a bit premature until you get your legal act together.

From the OP

September 2, 2013:
At the moment this is not an offer to enter a loan agreement but an exploration of interest in the idea.  We are not seeking lenders right now but we would like to start conversations with anyone who might be interested or have questions.

[Vod]

From the OP

September 2, 2013:
At the moment this is not an offer to enter a loan agreement but an exploration of interest in the idea.  We are not seeking lenders right now but we would like to start conversations with anyone who might be interested or have questions.

You might get more potential discussion if you move this to project development. You're not discussing a loan here.

[CoinATM]

You might get more potential discussion if you move this to project development. You're not discussing a loan here.

I hope to be soon and I value input from this forum in creating a workable structure.  The larger community does not have your insight, Vod.

[Vod]

You might get more potential discussion if you move this to project development. You're not discussing a loan here.

I hope to be soon and I value input from this forum in creating a workable structure.  The larger community does not have your insight, Vod.

Then get input from the community!

You will not get the proper information here.  The people that read this forum want to lend coins - they have little interest in the laws of a bit coin ATM.

Move to project development forum and you will get higher quality responses.  :-)

[giszmo]

If some "for obvious reasons we stay anonymous" company runs it, I would certainly not invest.
If my brother runs it, I would invest.
With anybody in between these two, I would invest more or less time to decide if it's worth the hassle.

[marcus_of_augustus]

You're selling Bitcoins.  MSB regulations apply.

This is wrong. For most people who are selling bitcons, MSB regulations do NOT apply. However, if you are selling AND buying bitcoins for fiat (e.g. exchanging) and doing it as a business they probably will, depending on State, blah, blah, extensive legal morass, etc.

[crazy_rabbit]

If some "for obvious reasons we stay anonymous" company runs it, I would certainly not invest.
If my brother runs it, I would invest.
With anybody in between these two, I would invest more or less time to decide if it's worth the hassle.

+1

[DyslexicZombei]

Not a lawyer but I think you're gonna need some big hitter investors to comply with all 50 state laws for MSBs. You're gonna need someone w/ deep pockets that shares the same vision. It's onerous but dem's the breaks.

I would def. invest with one that did the above.