JAKARTA – The rapid rise and decline of crypto ATMs is raising fresh questions about whether cryptocurrencies truly have practical, real-world use cases beyond trading and speculation.

Once seen as a bridge between digital assets and everyday finance, crypto ATMs—also known as CTMs—allow users to buy Bitcoin with cash or sell crypto for physical money. At their peak in 2022, nearly 35,000 machines were operating across the United States, installed in locations such as gas stations and grocery stores.

That number has since dropped to around 27,000, reflecting slowing demand and growing scrutiny. Even industry leader Bitcoin Depot has struggled, with its share price falling by nearly 90% since going public in 2023.

Crypto ATMs work by connecting users’ digital wallets to physical machines. Customers can insert cash, scan a QR code, and receive cryptocurrency directly in their wallets. They can also reverse the process, converting crypto into cash.

However, convenience comes at a steep price. Transaction fees at crypto ATMs range from 10% to 25%, far higher than online exchanges such as Coinbase, where fees typically hover around 0.5%.

Operators argue the machines serve a niche market, particularly unbanked or underbanked individuals who lack access to traditional financial services. According to industry claims, these groups are more likely to use crypto due to limited banking options.

But data challenges that narrative. Surveys by the Federal Deposit Insurance Corporation (FDIC) show that only about 4.5% of US households are unbanked, and they are significantly less likely to own cryptocurrency than those with bank accounts.

Analysts say the high fees and limited adoption suggest crypto ATMs are not widely used by everyday consumers. Instead, concerns are growing over their role in facilitating illicit activity.

Law enforcement cases have revealed instances where crypto ATMs were used to convert large amounts of cash into Bitcoin anonymously. In one case, an operator in New York allegedly ran dozens of machines processing more than $5 million without requiring customer identification.

Scams are also a major concern. The Federal Trade Commission (FTC) reported that US consumers lost over $110 million in 2023 through crypto ATM-related fraud, often targeting elderly victims. Scammers typically trick individuals into depositing cash into machines and transferring cryptocurrency to anonymous wallets, making recovery nearly impossible.

Despite efforts by legitimate operators to implement Know Your Customer (KYC) requirements, experts say preventing fraud remains difficult. Transactions are irreversible, and wallet ownership is hard to verify.

The industry’s financial performance reflects these challenges. Bitcoin Depot, which operates more than 8,000 machines in North America, processed $135 million in transactions in a recent quarter—equivalent to about $180 per machine per day. With median transaction sizes at $250, many machines appear to go unused for extended periods.

Although fees are high, operating costs—including rent, maintenance, and cash logistics—leave operators with slim margins. Bitcoin Depot reported only modest profits despite its scale.

For many analysts, the trajectory of crypto ATMs signals a broader issue within the cryptocurrency sector: translating digital innovation into meaningful, everyday utility.