Fort Worth may seem a long way from the current cybercurrency roller-coaster, but the city of cattle and cowboys has some big stakes in the digital currency market.
There’s Fort Worth’s Turr Demeester, considered one of the top analysts and market observers of digital currency, and then there’s Coinsource, the Fort Worth-based operators of the world’s largest bitcoin ATM network. Coinsource was founded – and bootstrapped – in 2015 by Bobby Sharp and Sheffield Clark, two entrepreneurs.
Clark had experience in the ATM business world and they both thought a bitcoin ATM was the way to go in the Wild West of cybercurrency. It was also going to be challenging.
“Once we learned how important compliance was – and the transparency we would have to have with our banks to be successful in getting an account – we obviously invested heavily in building our AML [anti-money laundering] and KYC [know your customer] program and then staffing it correctly with experts that could support Bobby and I in the venture,” said Clark, CEO of Coinsource.
In November, Coinsource made its single largest installation of bitcoin ATMs to date, adding 18 machines in Atlanta and two in nearby Athens, Georgia. Coinsource AMTs are operational in 12 states: Arizona, California, Georgia, Louisiana, Missouri, Nevada, New Jersey, New York, Oklahoma, Pennsylvania, Tennessee and Texas. Its largest areas for its bitcoin ATMs are in New York and Los Angeles. There are several in the Dallas-Fort Worth area.
“Our goal is to give everyone the equal ability to access bitcoin, particularly like now when there is record demand, so they can participate in this new economy,” said Clark. “Part of making this marketplace accessible is making sure our fees are less than half that of any other operator, and customers will be given fee-free transactions for first-time use of any new machine.”
Coinsource bitcoin ATM fees are 8 percent for purchases and 4 percent for withdrawals. Clark sees that as roughly equivalent to ATM fees. Using Coinsource is also more reliable than using some online sites, he says.
The bitcoin ATMs can be found in a variety of locations, from bodegas to restaurants to gas stations, but Clark said the company listens to its customers.
“If we know there’s a need there, we’ll find a way to get one there,” Clark said. He noted one customer was driving from Oklahoma City to use terminals in the Dallas-Fort Worth area. “Literally, he was driving all the way from Oklahoma, so we got one up there,” he said.
While bitcoin and cybercurrency are hot at the moment, Clark sees the currency as having two purposes.
“Bitcoin is catching fire and the United States is catching on; everyone wants to invest and get involved,” he said.
He sees it, first, as an alternative form of payment, but second as a form of investment and a useful tool for the underbanked and unbanked population.
“I’d say seven out of 10 of our customers, the balance would be more of the unbanked, underbanked, underserved that don’t have access to traditional financial services and institutions that utilize bitcoin as a medium of exchange,” he said.
The company recently moved its software development in-house so it could be more nimble as the bitcoin market has grown, particularly since bitcoin futures began trading on two U.S. financial exchanges late last year.
Coinsource has also focused on building a world-class compliance and consumer protection program, multi-tier high touch support, and a service that supports millions of unbanked and underbanked Americans, according to Clark.
“Obviously when you see Western Union and MoneyGram and check cashing services, those things exist for a reason, and I think that we really are an alternative to those and a less expensive option to remitting money, to buying things online,” he said.
The company says it is fully licensed and compliant with state and national regulatory policy, a key to its plan for growth. “Compliance is key,” said Clark. Part of that push for compliance was cemented when the company added Arnold Spencer as general counsel for Coinsource. He oversees all legal and compliance matters for Coinsource and has the bona fides rare for a startup industry. From 2000 to 2010, Spencer was an assistant U.S. attorney in the Eastern District of Texas. He specialized in securities fraud, financial fraud and money laundering prosecutions, and personally prosecuted more than 100 federal cases.
“It was a big move for us and showed people we were in this for the long haul,” said Clark.