Coinbase, the world’s most well-funded bitcoin company, has opened its exchange and online wallet in the UK, targeting British enthusiasm for the digital currency as it eyes international expansion.
The San Francisco-based start-up launched its UK services on Tuesday after securing a
banking partnership with an unnamed European bank – according to an article in the FT.
The launch is a boost to plans to transform the UK into a global hub for the digital currency, with the government having made recent moves designed to allow more bitcoins to flow through Britain. The Bank of England also published a report last year which said that the cryptocurrency poses little risk to monetary or financial stability.
Coinbase has created a “wallet” that allows people to store, send and accept payments in bitcoin. A few months ago it also opened an exchange, allowing people to change traditional money into the digital currency. This has quickly grown into one of the world’s largest exchanges by volume of bitcoin traded.
On Tuesday, the group made both these services available to British customers, allowing them to convert sterling into bitcoin. Though the wallet is already available in 24 countries the exchange was previously only available in the US.
Brian Armstrong, chief executive of Coinbase, told the Financial Times it had decided to launch in Britain because “when I met with everyone in the UK, the interest is off the charts . . . the level of excitement there is palpable. There’s interest in Europe, but it’s not to the same degree”.
He added: “It’s really just early stages for bitcoin; you can’t use it easily in every country in the world. It wasn’t possible until recently to store it securely, and now we’re seeing all sorts of new applications being built on top.
“But a lot of that is not possible until you have this infrastructure in place, namely an easy way to convert it to local currency and a more stable price. Having a trusted exchange in every country in the world is a prerequisite in our mind to having bitcoin grow. That’s why this is significant.”
The cryptocurrency has been dogged by controversy, price volatility and hackers raiding bitcoin exchanges. The British Bankers’ Association, which represents the UK’s largest lenders, has warned that bitcoin could be helping to fund terrorism.
But in February, the BoE, which had previously displayed scepticism about bitcoin, released a discussion paper saying digital currencies “may have considerable promise” and asked whether central banks should issue their own digital currencies.
Last month the UK Treasury said it would regulate digital currencies, such as by applying anti-money laundering rules to bitcoin exchanges.
Mr Armstrong said he had spent six months talking to the FCA before deciding to launch Coinbase services in the UK. “We wanted to make sure it was a green light from them before doing it,” he said.
However, the operation of virtual currency exchanges is not a regulated activity. Thus, the FCA does not grant approval to bitcoin exchanges such as Coinbase.
Earlier this year, Coinbase secured $75m from investors including US venture capital groups, DFJ, Andreessen Horowitz and Union Square Ventures, making it the best-backed bitcoin company in the world.
But it was the presence of traditional financial services companies and figures in the funding round, such as the New York Stock Exchange, Spanish bank BBVA and the former chief executives of Citigroup and Reuters, that was seen as an indicator of growing investor interest in bitcoin.