Are crypto kiosk (Bitcoin ATM) operators money transmitters?

Yes. An owner-operator of a convertible virtual currency (CVC) kiosk who uses the terminal to accept currency from a customer and transmit the equivalent value in CVC, or the reverse, qualifies as a money transmitter, for transactions receiving and dispensing real currency or CVC (FIN-2019-G001, section 4.3).

What the guidance says:

• Kiosks are electronic terminals acting as mechanical agencies of the owner-operator. They may connect to a separate CVC exchanger or draw on CVC the owner-operator holds.
• FinCEN's private ATM guidance, which says owner-operators who only link an accountholder to a regulated depository institution account to verify balances and dispense currency are not money transmitters, does not apply, because CVC kiosks do not link accountholders to such accounts.
• Owner-operators that accept and transmit value must comply with FinCEN's money transmitter regulations.

What to do:

• Register with FinCEN. The initial form is due by the end of the 180-day period beginning on the day after the business is established (31 CFR 1022.380(b)(3)). The regulation does not define "established", and FinCEN's guidance describes the period as running from the start of money transmission, so document your start date.
• Renew. Registration runs in two-calendar-year periods, and each renewal form is due on or before the last day of the calendar year preceding the renewal period (31 CFR 1022.380(b)(2)-(3)).
• Re-register, filing not later than 180 days after the event, if a state-registered business has a change in ownership or control requiring state re-registration, if more than 10 percent of voting power or equity interests transfers (unless the business must report the transfer to the SEC), or if the number of agents rises by more than 50 percent during a registration period. The year of the event starts a new two-year period (31 CFR 1022.380(b)(4)).
• Build a risk-based AML program reflecting your customers, geographies and products (FIN-2019-G001).
• Map your recordkeeping, reporting and monitoring duties under Parts 1010 and 1022, such as Currency Transaction Reports and Suspicious Activity Reports where applicable (FIN-2019-G001).
• Test transactions against the Funds Travel Rule. A transmittal of $3,000 or more (or its CVC equivalent) may trigger requirements (FIN-2019-G001).

State licensing is outside this answer.

Sources

1. FinCEN FIN-2019-G001: https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf

This answer is general information, not legal advice. Forteris is not a law firm.