~snip~
Good point. The machine I had in mind would still be automated (the cash could be taken in a single "slot", because it must be checked for counterfeit money, and then delivered to the compartment). Buying BTC at such an ATM could even be instant if you act as a "taker", i.e. you fill an order from a seller which already exist for that ATM. But of course, one of both parties (buyer or seller) will normally have to wait its order to be filled.
Regarding regulations, you're probably correct that even if this machine only custodies cash, it could be still "facilitating transactions" which is the goal would be to make this machine as close as possible to a simple locker. I could also imagine a simpler design where you
Your response seems inadvertently cut.
Anyway, I'm afraid there can't be an instant transaction if you're dealing with a decentralized P2P service especially via an ATM, because you're directly communicating with a person on the other end of the line. You're basically trading using an ATM. Even if you're the taker, the seller would still verify outside of, say, Bisq that the funds are indeed received, then confirms on Bisq the receipt. Bisq would then release the funds from the escrow address to yours. That's on-chain. Again, it won't be instant.
Not to mention that while you're paying in cold cash, the other end of the trade would be receiving money via a bank account. Otherwise, if your design in mind would be implemented, which is for the "seller would get a code for the ATM and would have access to the compartment where the buyer deposited the cash", that would be more implausible, at least right now. You better do it with Peach Bitcoin's meetup feature or something similar.
I'm not sure if you're familiar with Satori Coins. They're Bitcoin-loaded chips which hold a private key underneath a holographic sticker. They used to be offered in a gashapon in Japan. It's a vending machine. It's probably the quickest design, although it would still be custodial so to speak because they're generating the private keys. But you'll have to scan and move the funds right away as soon as you get it. With the current level of Bitcoin's adoption, however, I'm not sure if this could still be done without AML compliance.