Bitcoin fans can now buy the cryptocurrency from a physical machine in a public location in two of America's 50 states. And while California and New York remain the country's primary tech hubs, these states are still not within view of the finish line in the race for Bitcoin vending machines, which are also commonly called Bitcoin ATMs.
Instead, New Mexico and Massachusetts installed the first and second ATMs in the U.S., respectively, thanks in large part to more lenient local regulations. Meanwhile, entrepreneurs on the two coasts claim they are eager to comply, but say that local regulators have been slow to provide answers, and current guidelines are vague or cost-prohibitive for small operators.
See also: A Complete, Interactive History of Bitcoin
"The current situation in New York does not favor any operator in Bitcoin," Willard Ling told Mashable. "The regulations are very restrictive on creating new [Bitcoin] businesses."
Ling is attempting to install a Bitcoin vending machine in a bubble tea shop in New York City's East Village. He purchased one of the machines, which cost $5,000, from a New Hampshire-based company called Lamassu in December. Since then, he's been working with his lawyer to clear regulatory hurdles.
At the federal level, Bitcoin machine operators must register with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) and set up an anti-money laundering program.
Officials have been wary of Bitcoin, which has become the emblematic cryptocurrency; it's been hailed as a way to make anonymous online transactions, and it has many connections to illicit sites, most notably Silk Road, the online black market for drugs.
State regulations, rather than federal ones, are impeding prospective Bitcoin ATM operators like Ling. Right now, Ling is deciding on whether to apply for a money transmitter's license, which requires payment of a $500,000 bond — or to wait for what state regulators are calling a "bit license."
At a Bitcoin hearing on Jan. 30, Benjamin Lawsky, the state's superintendent of financial services, hinted that the bit license could debut in 2014. But for now, the path to Bitcoin ATMs in New York remains unclear.
"We're taking one step at a time. Don't have answers yet," Lawsky said during a Reddit AMA last week. "It's a question we will have to face down the road."
Lawsky's office did not respond to our inquiry for this story.
Ling said he has not yet received his Bitcoin ATM. He plans to store the machine in his Queens, N.Y., apartment when it arrives, until he can figure out the details.
In California, it's much of the same. Cole Albon has been trying to deploy his Bitcoin machine for more than a month, to no avail. Albon said a state license would require him to post a $250,000 bond.
"My original intent was to just put the machine in public when I got it, and wait for a cease and desist letter before I decided to try to get funding for compliance," Albon told Mashable in an email.
He backed off that plan when Bitcoin wunderkind Charlie Shrem was arrested for money laundering in late January. The federal government alleges that Shrem, the 24-year-old CEO of a successful company called BitInstant, knowingly sold Bitcoin to people who intended to use it for illegal transactions on Silk Road.
"I do not wish to pick a fight with any government official," Albon said, "but I feel that rather than throw people in jail for money laundering, the government should offer up some resources into making [anti-money laundering] compliance easier for the little guy."
In fact, the man who won the race to bring a Bitcoin machine to the U.S. did so by abandoning his home state. Eric Stromberg lives with his family in the San Francisco Bay Area, but he deployed his Bitcoin vending machine in Albuquerque, N.M., where he said the regulatory climate is more favorable for money service businesses.
"It's tough being away from my family for an extended time to do this," Stromberg told Mashable in an email, shortly after his machine debuted last week.
Back in New York, Willard Ling is sitting on more than 100 free bubble tea vouchers he has accumulated for frequenting the store where he intends to place his Bitcoin ATM. Ling is planning to host a bubble tea party for friends and business associates when the machine goes live. But for now, his prospective business remains on the bubble.
BONUS: What Are Bitcoins and How Do They Work?
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