Polygon is nearing an acquisition of Coinme, one of the earliest bitcoin ATM kiosk operators in the United States. The deal, which is still kept under covers, will help Polygon reach beyond the current Layer-2 operations.
The acquisition would value Coinme at between $100 million and $125 million, per sources close to the matter. Polygon, an Ethereum layer-2 blockchain focused on improving transaction speed and reducing fees, is reportedly being advised by investment bank Architect Partners on the potential transaction.
This acquisition is viewed as the next logical step for both companies. Raising $450 million in 2023 with the support of Sequoia Capital India has enabled Polygon to invest in diversification, while Coinme will benefit from being supported by a strongly funded player in the cryptocurrency market.
Polygon eyes offline expansion with potential Coinme deal
Coinme was founded back in 2014 and is referred to as an industry pioneer as far as crypto ATMs go, within the USA. The company has over 50,000 Bitcoin kiosks located across 49 states, allowing individual traders an actual way of entering or withdrawing from the crypto market.
However, an acquisition would provide Polygon direct entry into the offline distribution infrastructure of the cryptocurrency world at a stage when cryptocurrency networks are showing increasing focus on real-world adoption.
This is significant for Polygon as it appears to be a sign of expanding interest from the company beyond the provision of blockchain infrastructure to financial services for consumers.
By integrating its on-chain scaling solution with that of Coinme’s physical infrastructure, it appears that Polygon may be targeting traditional users of cash and directing them towards decentralized applications and digital assets.
Polygon buyout for Coinme comes amid regulatory hurdles
Last month, regulators in Washington state intervened and forced Coinme to halt its money transmission business due to improper handling of customer funds.
The allegations made by the Washington state Department of Financial Institutions state that Coinme was holding money that customers had not yet redeemed and reporting it as income to its company when it shouldn’t have done so, according to the regulator.
The system designed by Coinme consisted of selling physical vouchers to consumers at cryptocurrency kiosks.
According to DFI, if those vouchers were not redeemed within a specified time, Coinme considered that balance its own, as per the DFI.
In yet another instance related to cryptocurrency on-ramps, the regulator has demanded that an on-ramp based in Seattle return over $8 million to its users.
Polygon’s $450M raise signals strong long-term confidence
Polygon raised $450 million in a massive funding round led by Sequoia Capital India in 2023, which is a testament to its faith in its long-term plans.
At that point, Polygon has been presenting itself as one among the important actors that were helping to scale Ethereum by ensuring faster and cheaper transactions. The new injection of capital allowed the team to invest in new tech, grow its development community, and also move further into zero-knowledge scaling solutions.
The increase was also a sign that there was institutional confidence that Polygon could play an important part in allowing blockchain technology to enter the mainstream.