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Is this idea plausible? Or will the authorities shut all these locations down because of doing something other than what they're registered for? I don't know how strict other countries are, but I think this works where I am.
Don't know where you are but it would not work in the US or Canada or the EU.
Once the value of the transactions passes a certain value you have to report it even if you are not directly involved in it. More or less once you take the cash you are responsible for where it goes.
This has been through the courts all over the world various times. Always comes out the same, once the cash is in your custody it's on you to follow proper reporting.
-Dave
First and foremost, before anyone can install bitcoin ATM, usually, they need permit from their government or the local authority. Hence, I don't think they can operate without the interruptions from their government. Unless, they will operate in the black market. But for them to operate freely, they would need government permit to operate.