Hong Kong startup Cryptex has launched a new 'bitcoin ATM debit card' that the company claims should work with as many as 90% of US ATMs, plus thousands more worldwide.
The Cryptex Card is an unusual hybrid that allows users to take out cash on standard bank ATMs, but with the source of the funds being, indirectly, your bitcoin wallet.
The user does not actually make direct bitcoin-to-fiat exchange transactions via the card, however.
First the card user must send bitcoins to a linked Cryptex bitcoin address. Next, a specified amount of these bitcoins are converted into fiat currency, which can then be withdrawn from regular ATMs (see the company's promo video below).
Cryptex is a Hong Kong outfit, and unsurprisingly its ATM debit card is tied to UnionPay – China’s only domestic bank card organization.
The company says its card can be used to withdraw cash from more than 90% of ATMs installed in the US via the Discover Network.
In addition, it should work with different ATMs in 80 countries worldwide – although which networks it uses is not clear. Effectively, if the ATM accepts UnionPay, the card should work.
Pros and cons
The prospect of having a standard bitcoin card that can be used on most ATMs sounds tantalising to say the least, but there are pros and cons to consider.
Bitplastic launched a similar card a while ago. It charges $1.50 per ATM transaction, with a daily limit of $200, which means the fee on that amount is 0.75%. However, the Bitplastic card advertises a yearly limit of just $3,500.
Cryptex has not yet revealed any fees or limits, other than to say:
"We provide competitive exchange rates based on the amount of bitcoin you want to convert."
However, rather than the fees, bitcoin's volatility is more of a concern when it comes to such debit cards.
Operators may offer competitive exchange rates, and conversion occurs when the withdrawal request is processed, but depending on how the price fluctuates, you can end up with more or less cash than you bargained for.
The debit card approach does have clear advantages over dedicated bitcoin ATMs, most notably the ability to withdraw from the many thousands of ATMs that already exist globally. However, they cannot process bitcoin transactions and you can’t top up a bitcoin debit card from a standard ATM.
UnionPay has been named in a few tax-dodging schemes in China. Last month Reuters reported that state-backed bank cards, including UnionPay, are used to illegally spirit billions of dollars abroad.
Much of the money ends up in Macau and Hong Kong, where number of 'merchants' allow Chinese nationals to make fake purchases in Macau and simply turn over cash in exchange for the 'purchase'.
This is done to get around China’s strict currency export controls. Authorities in China, Macau and UnionPay officials agree that the practice is widespread and the People’s Bank of China (PBOC) is also aware of the problem.
UnionPay says its simply cannot do anything to crack down on abuse, as it has no authority over the matter.
Disclaimer: This article should not be viewed as an endorsement of any of the companies mentioned. Please do your own extensive research before considering investing any funds in these products.