Coinme CEO Neil Bergquist on Surviving Crypto Winters and Building a Successful Bitcoin ATM Business

Crypto companies can flame out as quickly as they rise, but Coinme has had one of the longest runs in the industry. The Seattle-based exchange recently marked its 10th anniversary and surpassed $1 billion in retail sales.

"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 Neil Bergquist, CEO and co-founder of Coinme, in a statement marking the anniversary.

From a single bitcoin ATM in 2014 to a network of over 40,000 cash locations today, Coinme's trajectory reflects Bergquist's vision of making digital assets accessible to more mainstream consumers.

As Coinme enters its second decade, Bergquist offered insights into the company's growth, its approach to simplifying crypto transactions at physical locations, and the future of digital currency adoption in an increasingly cashless world.

Scaling While Embracing Regulation

Neil Bergquist and co-founder Michael Smyers started Coinme based on what they saw as an opportunity to bring cryptocurrency to the masses.

"We founded Coinme in 2014 because we believed in the power of crypto to help people improve their everyday financial lives," Bergquist explained in the 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 company's growth trajectory has been impressive, with Coinme achieving a yearly average growth rate of 164% since its inception.

This growth hasn't come without challenges, however. Bergquist recounted the early days of operating bitcoin ATMs: "On a day-to-day basis, all we did was put out fires. The ATMs would malfunction, which seemed to happen every few days. A customer's ID would get stuck in the ID reader, and, reasonably, they would need it back as soon as possible."

Like any crypto business, Coinme also had to weather multiple crypto winters and extended periods of market downturn.

Bergquist was candid about the challenges, noting that in the company’s early days, "We maxed out credit cards, took out high-interest personal loans, negotiated payment plans with critical vendors, and did whatever we could to preserve cash."

One of the biggest hurdles Coinme faced was navigating the uncharted regulatory conditions for nascent crypto businesses in the U.S. Bergquist emphasized the company's commitment to compliance from day one, explaining that the company hired a team of fintech lawyers and dove deep into the nuances of anti-money-laundering laws like the Bank Secrecy Act and the U.S. Patriot Act, as well as state-level money transmission laws.

This focus on regulation has been key to Coinme's partnerships with major retailers and financial services providers like Coinstar and MoneyGram, which have implemented the company’s API at their locations in grocery stores and convenience stores around the country.

"The reason why we're in the largest grocery retailers in the United States is because we've solved the trust problems and we make crypto safer. We de-risk it, and that's why we have these massive partnerships in place," Bergquist explains.

Making Crypto User-Friendly

A key focus for Coinme has been simplifying the user experience for mainstream consumers via bitcoin ATMs.

"We just want to make it user-friendly and simple: In two clicks, you can buy bitcoin,” says Bergquist.

This simplification extends to the technical aspects of cryptocurrency transactions.

"What we did is integrate the user’s wallet with the machine," Bergquist continues. "When you put cash in the machine to buy bitcoin, we automatically deposit it into your Coinme wallet. You don't even need to know what your wallet address is. We handle that complexity, so it feels more like a bank deposit experience."

In addition to streamlining the user experience, Coinme's growth has been largely driven by partnerships with existing financial services providers and retailers.

The company offers an API that enables third-party developers and businesses to integrate Coinme's services into their own applications and systems. This API supports functions such as buying and selling crypto, account management, and transaction history retrieval, all while maintaining a strong focus on compliance and security. It’s an approach that benefits both Coinme and its partners through revenue-sharing agreements, while providing consumers with convenient access to crypto at familiar locations.

The company’s integration with Coinstar's kiosks transformed a vast retail network into crypto transaction hubs, allowing customers to purchase bitcoin with cash. By 2019, this partnership expanded Coinme from 70 to 2,100 locations across the U.S., and by 2023 that number had reached 9,700 kiosks in 48 states. Additionally, a 2021 partnership with MoneyGram allowed users to exchange cash for bitcoin at 20,000 MoneyGram locations. In January 2022, MoneyGram acquired a 4% stake in Coinme to further integrate cryptocurrency services with traditional financial systems.

"There is a Coinme location located within 5 miles for about 90% of the American population,” says Bergquist. “When we got started, we were one of the first 10 bitcoin ATMs in the world. And now we've solved the access problem.

"We're one of the only places where you can actually liquidate your crypto for cash so that cash can be utilized to buy goods or services.”

The Future of Crypto Adoption

Looking ahead, Bergquist sees more potential for mainstream crypto adoption.

He pointed out several specific use cases, including hedging against inflation, direct payment to companies looking to cut standard transaction fees, and cross-border payments and remittances

"There's $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, noting Coinme’s April 2024 partnership with global digital payments platform CiNKO. “Well, now you can put that cash into a Coinme location, get crypto, and send that anywhere faster and cheaper than a lot of existing solutions."

However, Bergquist acknowledged that education remains a significant barrier to widespread adoption.

"I think right now it is really an education problem," he said. "It’s so important to educate people on how crypto is solving problems that exist with our current monetary system and financial service providers.”