The “Blockchain Hotel” in the German city of Essen has launched its first Bitcoin ATM. According to Coin ATM Radar, there are now 30 Bitcoin ATMs in Germany. Still, the legal situation of the machines is not clear.

TheBlockchain Hotel is located in the city of Essen, the ninth largest city in Germany and an industrial center. Three DAX companies and eight of the 100 largest publicly held German corporations are based here.

The purpose of the blockchain hotel is to provide a hub for those who want to exchange ideas with other blockchain enthusiasts.

One would expect such a venture to set up in Berlin, where the start-up and tech communities are thriving. But no, the reasons why the founders choose the city of Essen is because they view it as one of “the largest creative centers of Europe” – and because of lower operational costs.

Recently, the Blockchain Hotel has made headlines as it presented its brand-new Bitcoin ATM. Using a Bitcoin ATM is not more complicated than using any other ATM. Users have to insert cash instead of withdrawing it. The user scans the QR code of his wallet, inserts cash, and receives Bitcoin in his digital wallet within a few minutes.

The ATM operator, which is the Blockchain Hotel itself, charges 4.5% fees for the transaction. The ATM allows to transfer up to 2,500 Euro without any KYC checks. The Blockchain Hotel plans to launch a service that will enable selling Bitcoin and withdrawing cash in the near future.

Legal uncertainty in Germany has prevented Bitcoin ATMs from spreading

According to Coin ATM Radar, there are now 30 Bitcoin ATMs in Germany. Cologne is leading the list with 8 ATMs, followed by Munich (5), Wuerzburg (3), and Berlin (3). Globally there are currently 4,873 Crypto ATMs in operation.

There are fewer crypto ATMs in Germany compared to its neighboring countries, because the legal situation is not clear. Operators risk their ATMs being shut down by the government one day because there is no legislation clarifying what licenses the operator needs – if any.

At the center of the debate are not the ATMs, but the legal situation of Bitcoin itself. According to the German financial markets regulator BaFin, Bitcoin cannot be considered money and is not an officially recognized means of payment.

In other words: Using Bitcoin to pay for goods and services is legal. You can pay with whatever you like, as long as the seller accepts it. However, trading Bitcoin commercially is illegal as per the BaFin’s definition.

As Bitcoin ATM operators charge fees, their service classifies as commercial trading. Hence, they would need a license, according to the BaFin.

A court decision in late 2018 has motivated ATM operators

In late 2018, the Berlin Court of Appeal has decided Bitcoin is not a financial instrument and does not have to comply with German banking and financial market laws and regulations. While that put the BaFin on the back foot, the financial watchdog argued the Berlin Court of Appeal only considered a single incident and not Bitcoin in general.

Nevertheless, ATM operators have since started to launch more machines in Germany, hoping regulators will be on their side. Whether or not that will eventually be the case, we don’t know.

The Blockchain Hotel’s website reads, “Pioneers have it good. They hang out in young, fresh, open communities, they help each other, there is no competition, the prospects are grand, and later, when things take off commercially, such people are in high demand.”

Good. But there is risk in being a pioneer, too. Let’s hope the BaFin won’t disturb the peace in the Blockchain Hotel.

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