Puerto Rico firm seeks royalties on bitcoin ATM transactions

Puerto Rico-based blockchain and robotics company Bots Inc is exploring options with “a major law firm” to initiate litigation against companies that operate bitcoin ATMs in the US.

According to cryptocurrency news site Coin Telegraph, the “upstart blockchain firm” might demand between US$14mn and US$18mn in monthly revenue thanks to the acquisition last month of a patent on bitcoin ATM technology. 

Bots acquired the rights to US Patent No. 9,135,787 B1 “Bitcoin ATM/Kiosk Device and Enrollment Protocol and Method of Use Integrator System” on October 29 through its subsidiary First Bitcoin Capital. The patent was filed in 2014.

It covers protocols that underpin the operation of bitcoin ATMs, with Bots believing this makes it eligible to “per transaction” royalties on ATMs using the technology, wrote the outlet, citing comments from Bots CEO Paul Rosenberg.

“Per-transaction royalty payments will be negotiated for a several-year term,” said Rosenberg. “Some agreements, especially with the manufacturers, could cover previous years and/or a significant number of coming years.” 

Potentially impacting more than 9,400 bitcoin ATMs installed in the US that are estimated to process between 130 and 180 transactions per month, Bots believes the patent entitles the company to royalties, though adjudicators will determine whether this figure is open to negotiations and/or determine whether the underpinning protocols are as critical as Bots asserts.

Bots hopes to “reach an amicable settlement without litigation” with US ATM operators, saying it will “offer those operators to join a consortium of bitcoin ATMs.” 

Bitcoin ATMs footprint

Interest in bitcoin ATMs has increased in Latin America in recent years, roughly doubling in the last year to 11,867 worldwide and reaching into Latin America as far as Venezuela, where ATMs are in short supply. In some territories even incumbent banks like BBVA and Citibanamex have worked to expand functionality to allow for the legal purchase of cryptocurrencies.

According to tracking site CoinATM Radar, the US continues to be the country with the largest number of bitcoin ATMs worldwide, with about 9,650 units in November. Canada follows with 921 units. 

In Latin America and the Caribbean (LAC), Colombia tops the list with 60 ATMs (coming in 10th worldwide). Panama is second with 18 ATMs and the Dominican Republic third with 16.

Argentina follows with 13 bitcoin ATMs, Mexico has 10, and Puerto Rico eight. The Bahamas, Peru and Chile have three units each and Costa Rica has two.

Rounding out the list, Aruba, Anguilla, Barbados, Brazil, Ecuador, El Salvador, Saint Kitts and Nevis and Venezuela each have one location. 

Next generation ATMs

In other ATM news, NorthStar Technologies, a division of Ranger American, has entered into an agreement with Hyosung America, a leading global company in the manufacture and development of next generation ATM technology, to become an authorized seller of its products for financial institutions in Puerto Rico and the US Virgin Islands.

This agreement brings together the resources of two leading companies in the field of ATMs and offers customers in both jurisdictions growth opportunities through the use of advanced technology that improves their customer service.

“Hyosung's strategy is to partner with best-in-class technology and service providers who have an outstanding reputation in their local business community,” El Nuevo Día newspaper cited Hyosung's VP for dealer channel sales, Andrew Ryan, as saying.

The next generation technology entails automating a wide range of branch operations to run on ATMs, reducing the need for most customers to enter branch locations and allowing branch employees to shift their focus toward customer service. 

 “Here in Puerto Rico, we are beginning to see that some of the local institutions are also aiming to adopt these changes, El Nuevo Día cited Isaac Wechter, Ranger American vice president of business development, as saying. “NorthStar is at the forefront of services to advance this transformation.”