Apart from the fact it would look suspicious walking up to a BTC ATM with a duffle bag full of $$$ - whats stopping these people converting their cash reserves to BTC?
they won't do it because there is no reason for them to do it. they don't gain anything, or any advantage an instead they lose a lot.
first there are fees that they have to pay to convert fiat to bitcoin specially when you use an ATM the fees are higher than usual ways.
second is the fact that bitcoin is traceable but cash that they are giving up is not!
and finally a criminal who wants to buy illegal stuff (like a gun for example) can not pay with bitcoin because other criminal sellers don't accept bitcoin in return for that stuff, they want cash which is not traceable...