Bitcoin exchange CEX.IO has expanded its operations to the US enabling customers in 23 states to deposit and withdraw fiat currency.
Citing Coinbase[1] as its main competitor stateside, Helga Danova, chief editor at CEX.IO[2] said that she was confident that they could become a “great alternative for US citizens and broaden the possibilities of buying bitcoin and trading other cryptocurrencies.”
The US launch comes amid a continued pivot away from mining services. The company halted[3] its cloud mining operations in January citing bitcoin’s declining price as a motivating factor.
Danova noted that the mining cease was a temporary measure, as the company looked to focus on developing its exchange.
“We’ve been developing in this direction for a long time”, she said, adding:
“CEX.IO has always been a bitcoin exchange. Even though our key advantage was cloud mining, we have offered trading of the cloud mining power for bitcoins and other cryptocurrencies.”
In order to access the exchange, consumers in the approved US states and jurisdictions will have to adhere to CEX.IO compliance procedures, based on know-your-customer (KYC) and anti-money laundering (AML) standards.
To register, traders must provide a form of identification, such as a national ID card or passport.
Western Union has formally responded to statements suggesting it is taking concrete steps toward using distributed ledger technologies via a partnership with Ripple Labs.
Long cited as a technology that could enable more cost-effective cross-border payments, Western Union has, as commentators have noted[1], what is perhaps one of the more evident vested interests in exploring digital currency offerings.
Still, representatives for the Colorado-based company remain tight-lipped about what the proposed project with Ripple Labs[2] would entail.
A spokesperson told CoinDesk:
“We have had preliminary discussions with Ripple regarding a pilot settlement project, but it is too early to discuss details at this time.”
The revelation suggests Western Union may be looking to use a system like Ripple to move fiat payments between customers in a similar manner as Align Commerce[3], which uses the bitcoin blockchain as means to remit payment across borders where it is exchanged locally.
Elsewhere, prominent companies working on cross-border payments include Kenya’s BitPesa[4] and the Ghana-based startup Beam[5], each of which is focused on promoting the technology in select African markets.
Fidor Bank, the innovative German bank that is bringing Bitcoin and digital fintech to mainstream banking, is now operating in Great Britain.
Fidor Bank, one of the world’s most innovative banks disrupting the traditional banking sector, has been recognized by the World Economic Forum as a “Global Growth Company.”
Founded in Germany in 2009, Fidor Bank offers a new approach to financial services.
“Traditional banks do not reflect their customers’ needs in the digital age,” notes the Fidor Bank UK website. “Customer requirements are not being met by traditional banks because of lack of innovation, increasing the distance between banks and their customers.”
A key feature of Fidor Bank is its community site, where users and representatives of the bank discuss the financial services provided by the bank in an open forum. The Fidor Bank community has become one of the most active financial communities in Germany, where more than 250,000 users, bank employees and board members engage in discussions around the clock. Of course, Fidor Bank UK has also a Facebook page.
The Fidor Bank Community Product Reviews section offers a free overview of the advantages and disadvantages of a wide range of financial products. Product reviews are completely independent and consist solely of the views of community members, with feedback from the bank.
Fidor Bank Community members develop reputation and “karma” points, and can join interest groups. The most popular interest group is dedicated to cryptocurrencies. This is not surprising, because Fidor Bank is popular among Bitcoin users and considered as the most Bitcoin-friendly mainstream bank. In October, Fidor Bank partnered with bitcoin exchange Kraken to create the world’s first cryptocurrency bank.
In February, the bank announced a “Bitcoin Express” option for German customers to buy and sell bitcoin instantly on the bitcoin.de partner exchange. Holders of a “Fidor Smart Giro Account” can purchase bitcoin directly from their bank accounts and receive bitcoin immediately after the purchase. They can also sell bitcoin to another Smart Giro Account holder and have the money instantly credited to their accounts. The Smart Giro Account is a full bank account with all the standard features, including interest on credit balances and a low-cost credit card. The latter is, in practice, equivalent to a card that can be recharged with bitcoin.
Similar services might soon be made available to customers in the U.K. as well.
Commenting on the recent launch of Coinbase in the U.K., The Financial Timesnoted that Great Britain is on its way to becoming a global hub for bitcoin and digital currencies, with both the government and Bank of England having made recent moves designed to stimulate the development of digital fintech.
A recent U.K. Treasury document titled “Digital Currencies: Response to the Call for Information” shows that the government is interested in supporting and understanding blockchain-based digital fintech, and understands the potential benefits it could bring to society.
Only U.K. residents can open a Fidor Bank U.K. account. Some Reddit users have already done so, and reported their first experiences.
Named after an ancient Roman Goddess, MonetaGo is looking to provide liquidity to Bitcoin exchanges in 35 countries around the world, with the goal to expand to 50 by the end of the year.
“We want to be the umbrella to the other exchanges,” Margaux Avedisian, co-founder and business development officer, told Bitcoin Magazine at Inside Bitcoins New York.
Whereas other exchanges launch in one country and look to sign up consumer traders, MonetaGo aims to connect all of these exchanges together to increase liquidity for them all. Further, MonetaGo allows trades to be settled in multiple currencies. This is possible because the company is built using the AlphaPoint trading platform, a company that Avedisian launched in 2013.
Jesse Chenard, CEO and co-founder, offered the following example: “If someone wanted to buy $100 worth of bitcoin on a U.S. exchange, but there was only $50 in available bitcoin, the trade couldn’t occur. MonetaGo would connect that trade to another exchange that also had $50 in available bitcoin, allowing the trade to go through.”
Chenard has experience taking small ideas and making them large. He is the founder of Tremor Video, which had its initial public offering in 2013. The rest of the founding team is composed of the former Creative Director at NASDAQ, one of the co-founders of igot, the president of the Bitcoin Association of Hong Kong, and Avedisian.
The company is in beta and is privately funded. While based in New York City, the company isn’t expanding into the United States yet.
“The regulation is still too uncertain in the United States,” Chenard explained.
The Coming Consolidation of Exchanges
The launch of another exchange begs the question: Does the ecosystem actually need another one?
Chenard doesn’t see it being a problem for MonetaGo because they view their company as more business-to-business, targeting the other exchanges. But he does agree that there will be consolidation in the industry over the next year and a half.
“If you look at some of these countries, they might have four or five different exchanges that are operational. You have one that is by and far the leader, you might have another that has some volume, but the remaining two or three really have no volume,” Chenard explained. “While they might have really great products, they just can’t get the volume to compete. These will either be acquired because of their products or they will be able to work through our exchange to gain that volume.”
Where’s Wall Street?
Liquidity is one of the reasons Wall Street has had to stay out of the sector. The amount of money Wall Street is looking to move is significantly greater than what is available on the exchanges.
According to Chenard, though, it’s a lack of understanding that has kept Wall Street from getting into bitcoin. “They’ve likely heard of bitcoin, but you ask them too much about it and they just don’t really understand,” he said.
On top of that, there is fear of bitcoin going away. “So many businesses have shut down over the years, taking their consumers’ bitcoin with them, that there is fear for a lot of Wall Street,” he said.
Fundamentally, until Wall Street understands the state of the asset and are certain their money won’t disappear, the large money firms are going to hang out on the side. Bitcoin just isn’t worth it for traders looking to move $50 million a day, Chenard said.
XBT Provider AB announced today the authorization of Bitcoin Tracker One, the first bitcoin-based security available on a regulated exchange, Bloombergreports.
Bitcoin Tracker One is an “Exchange Traded Note” (ETN) designed to provide investors with convenient access to the returns of the underlying asset, U.S. dollar (USD) per bitcoin, less investor fees. Bitcoin Tracker One is authorized by Sweden’s financial supervisory authority, and will be admitted to trading on Nasdaq Stockholm. The average dollar exchange rate of bitcoin from the most liquid exchanges provides the underlying reference price. The first day of trading is expected to be May 18th, 2015.
“We are proud to offer the world’s first “Bitcoin tracker” to be traded on a regulated exchange,” said Alexander Marsh, Chief Executive Officer of XBT Provider. “By enabling this easy and secure way to invest in Bitcoin we hope to have eliminated the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe to be the future of money.”
“These are exciting times for the Bitcoin ecosystem,” said Board member Staffan Helgesson. “Bitcoin Tracker One will be the world’s first financial instrument that provides consumers and institutions the possibility to invest in bitcoins without holding coins themselves.”
The Bitcoin Tracker One Prospectus, which has been approved by the Swedish FSA, currently is available only in Swedish. XTB Provider AB will hedge all sales of the bitcoin-traded note by buying an equal value in the bitcoin market. A spokesperson for Nasdaq confirmed to CoinDesk that XBT Provider had been approved as a certificate issuer and that its product was the first bitcoin-based item to be listed on the Swedish exchange.
Market maker Mangold Fondkommission, a Stockholm-based brokerage and investment bank, will assist XBT Provider with clearing services and acts as a liquidity provider for Bitcoin Tracker One.
The XBT Provider website states that the company is aiming to attract additional liquidity providers to the order book going forward to complement the natural flow of orders. The goal is offering a liquid market with a small spread, making the instrument attractive for all type of investors.
Bitcoin Tracker One is the latest addition to the growing number of bitcoin investment vehicles that aim to expand bitcoin investments beyond the volatile spot exchanges and attract traditional investors who prefer not to trade bitcoin as currency because they are scared by bitcoin’s wild price swings. Bitcoin Tracker One could become an interesting option for those traditional investors who are persuaded that the dollar exchange rate of bitcoin will rise in the mid- and long term, but prefer not to hold bitcoin directly.
Other similar bitcoin investment vehicles are Barry Silbert’s Bitcoin Investment Trust (BIT), which received formal approval for listing on the OTC Markets Group’s OTCQX exchange with the symbol GBTC, and the upcoming Winklevoss Bitcoin Trust ETF (Exchange Traded Fund), which will be available to investors on NASDAQ with the ticker COIN.
XBT Provider AB (publ) is a public limited liability company formed in Sweden and incorporated under Swedish law, with statutory seat in Stockholm. The XBT Provider website states that the company is backed and guaranteed by KnCGroup, a bitcoin mining hardware manufacturer and service provider that has been targeted by a recent class action lawsuit.
The Chamber of Digital Commerce will hold a two-day anti-money laundering (AML) compliance boot camp for bankers, regulators and digital currency companies. The event will be in New York City from April 30 to May 1, with an optional workshop on May 2.
The topic of compliance and regulations is a tough one for Bitcoin companies. AML Know-Your-Customer and OFAC regulations are difficult for large and established companies, as seen recently when PayPal was fined $7 million by the U.S. Treasury Department for processing illegal transactions from blacklisted persons.
According to the president of the Chamber of Digital Commerce, Perianne Boring, AML can be one of the most complex and difficult laws to be compliant with. And for a startup with little capital, a small staff, and little knowledge of the regulations it can be extremely difficult. When you add the nascent state of digital currency regulations on top of that, it can seem overwhelming.
The United States has been particularly difficult when it comes to regulations. The infamous New York BitLicense proposal, which is a proposed special license for digital currency companies in New York State, is set to be finalized “soon,” but an exact date has not been given. Analysts anticipate that the regulation could set a standard for Bitcoin regulations across the United States and possibly in other countries.
Connecting Digital Currency Companies, Bankers and Regulators
The boot camp is one of the few opportunities to learn about proper AML compliance for Bitcoin companies. It also is an opportunity for Bitcoin companies to meet with bankers and regulators, groups usually outside of the networks of most most companies in the Bitcoin community.
According to Carol Van Cleef, a partner at Manatt, Phelps & Phillips and the creator of the boot camp, the event is designed to bring together the various groups.
“A truly effective AML program cannot be developed in a bubble,” Van Cleef said. “And we know that one the biggest benefit for companies attending these programs is meeting the regulators, bankers and law enforcement also attending.”
“There aren’t many opportunities for these parties to get together and meet each other in a collaborative environment. Connecting in small working groups at boot camp helps both sides gain a better understanding of what the other has on their plate.”
Van Cleef knows what she is talking about when it comes to regulatory boot camps. She started the first AML compliance boot camp in 2005 to help the traditional banking industry comply with the Bank Secrecy Act and additional regulatory requirements emerging from the USA Patriot Act passed after 9/11.
According to Van Cleef, many banks and financial institutions were struggling at the time to understand what these laws and regulations required them to do. Banks were increasingly concerned as they watched more and more enforcement actions and civil money penalties being imposed for lax compliance. Van Cleef sees a very similar phenomenon happening within the digital currency industry which is why she thinks this boot camp is critically important for the young industry.
“New regulatory requirements can seem overwhelming and even somewhat distant, leaving many companies in the affected industries not interested in compliance. The bootcamp is not just a way to learn how to be compliant but also meet the people who work with the regulations every day.”
Regulatory Crash Course
The event is ideal not only for bitcoin startups just starting to build their AML programs but also for companies with established programs to both benchmark their efforts against others and fine tune their process. During the two day course, Van Cleef and the other course instructor, Maureen Sanders Piccillo, who is a former US Internal Revenue Service’s National AML Program Manager (the unit that examines digital currency companies for compliance with the BSA), will work with exercises that teach participants the necessities of an AML program.
There will also be an optional third day, which will be an AML program drafting workshop. According to Van Cleef, participants learn so much in the first days that they are unsure where to start, but the workshop gives attendees a clear game plan to follow.
Other sponsors of the event include Manatt, Phelps & Phillips, Tally Capital, MelonDrexel, compliance solution provider IdentityMind Global, the Anti-money Laundering Training Institute and Comptegrity.
The New York City boot camp is just one of the several educational initiatives the Chamber of Digital Commerce produces. Most recently, the organization sponsored the boot camp at the North American Bitcoin Conference, a large annual event for bitcoin enthusiasts and professionals. The boot camps are part of the industry group’s larger goal to educate government officials, financial professionals and bitcoin startups alike.
Credit unions may one day find some of their core functions replicated by bitcoin, a new report suggests.
According to Mercator Advisory Group[1], a global consultancy for the payments industry, such an evolution would only occur should bitcoin’s market volatility lessen and security mechanisms develop further.
The report[2], entitled Understanding Bitcoin’s Implications for Credit Unions, largely serves as a vehicle for understanding the fundamentals of bitcoin and its distributed ledger, the blockchain.
Not until the last page does the report turn to the implications of the technology on credit unions, noting:
“Assuming the volatility of bitcoin drops considerably to what is considered normal for currencies, and that security concerns around how best to secure private keys are resolved, we could see the proliferation of a host of new financial services backed by bitcoin, many of which are directly associated with the core businesses of credit unions today.”
Mercator posits that credit unions that primarily serve the remittance market could benefit from working with bitcoin exchanges, naming CoinX[3] and Coinbase[4] specifically, to “explore the possibility of offering a competitive international remittance product to their customers”.
However, the report stops short of saying that credit unions should jump at the chance to integrate bitcoin. According to Mercator, the benefits of operating bitcoin wallets for customers may not outweigh the costs of securing those holdings sufficiently.
Mainstream traction
The report asserts that bitcoin’s primary use case is to buy and sell speculatively and, as a result, “is unlikely to find much traction among the broader mainstream of CU account holders”.
Mercator also questions whether or not bitcoin can vehicle for consumers payments, and as a replacement for credit and debit cards in particular.
“[Transaction irreversibility] is undeniably beneficial to merchants (assuming they have a way to hedge away all the foreign exchange risk), but, for the most important stakeholders in the ecosystem – consumers – the benefit is unclear.”
Mercator closes the report by acknowledging the impact cryptocurrency will likely have on mainstream financial services, adding that the exact impact is difficult to foresee at this time.
“Predicting what exactly these implications will be, however, is a bit like trying to grasp the significance of the Internet would have been in 1995 – these are early days still,” the report concludes.
As part of a newly published roadmap for the Bitcoin Foundation, executive director Bruce Fenton has suggested removing bitcoin creator Satoshi Nakamoto as a founding member.
Though he called for the removal of all founding members from the organisation, Fenton singled out Nakamoto’s inclusion as “not accurate”, arguing that he or she was never involved in the group’s creation.
Fenton’s remarks suggest the intent of the change would be to underscore that the Bitcoin Foundation[6] is a decentralized network, one that he believes should work to avoid venerating individuals over collective goals.
He wrote:
“Overall, we should reduce power of individuals but work to remain effective using decentralization, crowdfunding and other means.”
Notably, the presentation marks the second time that Fenton has referred to bitcoin’s enigmatic creator during his tenure, following his first tweet[7] in the position reminding Nakamoto that “she has a board seat per the bylaws, if she produces a PGP key”.
The remark received a warm reception given the frequent portrayal of the unknown founder as a male and recent criticisms[8] in the media regarding bitcoin’s largely male following.
Move toward transparency
Fenton began the presentation by looking to set the record straight on the organisation, seeking to emphasize how it does not control or represent bitcoin as often portrayed in the media.
He sought to illustrate how he is seeking to make the foundation more transparent and democratic, having already released financial records for the nonprofit on 17th April and enabled a board chair to be appointed by election[9] at the suggestion of a member.
Going forward, Fenton suggested he would seek to continue this emphasis on transparency, stating that IRS forms would be released along with items such as the organisation’s executive compensation and travel policy.
Additional proposals included plans to re-use Swarm to conduct blockchain-based voting[10] in foundation elections and using Factom to secure foundation records to the bitcoin blockchain.
A full copy of the presentation can be found below:
Bitcoin financial services startup Circle Internet Financial has closed a $50m funding round.
The Boston-based company drew support from Goldman Sachs[1] and China-based IDG Capital Partners, as well as all of Circle[2]’s pool of existing investors, including Breyer Capital, General Catalyst Partners and Accel Partners.
Tom Jessop, managing director at Goldman Sachs’ Principal Strategic Investments Group, said the bank recognizes the need to invest in companies that “have the promise to transform global markets through technical innovation.”
Jessop added:
“We think that Circle’s product vision and exceptional management team present a compelling opportunity in the digital payments space.”
Quan Zhou, managing director of IDG Capital Partners and Circle board member, said that China in particular will be a major focus for the company as it looks to further internationalize its services.
“We are very excited about our investment and look forward to helping launch the company in the Chinese market where consumer adoption of innovative digital payment products is growing at a tremendous rate,” he said.
Circle has also announced the launch of new account features that enable customers to hold, send and receive US dollars. Those funds, according to the company, will be insured by the Federal Deposit Insurance Corporation[3].
The news follows reports[4] from earlier this week that Circle was looking to raise as much as $40m in new funding.
New feature outlined
The company’s new account features mean users can hold their funds in both bitcoin and USD.
Customers who choose to hold their funds in dollars rather than bitcoin can still make payments to people or merchants who accept bitcoin. At the time of payment, Circle will instantly convert funds from dollars into bitcoin.
Also, customers can accept bitcoin payments and Circle will convert the funds instantly into dollars in their Circle accounts, if they wish. Those who prefer to keep their funds in bitcoin can do so, CEO Jeremy Allaire explained in a new interview.
“We’re putting forward this hybrid fiat-digital currency model, which gives users the benefits of digital currency – instant settlements, global interoperability, no fees and high levels of security – but without having to use a new currency,” Allaire said.
He reiterated:
“This hybrid model allows customers to have all the benefits of digital currency, without the risks.”
Allaire went on to explain that a user can add dollars to his or her Circle account for free by way of bank transfer, then when they want to pay another Circle user, they can do so in an instant, whether the payment is denominated in bitcoin or dollars.
The company is rolling out the USD features gradually, launching them on selected customer accounts and adding new ones each week.
International outlook
Allaire said Circle’s next step is to add more currencies to the platform. He explained:
“We want to bring these benefits of bitcoin to all the major currencies in the world, including in the UK, Europe and in China.”
With these “global goals” in mind, Allaire said he believed Circle would benefit from significantly more capital and the addition of some new strategic investment partners, so he set out to raise some more funds.
“Having [Goldman Sachs and IDG Capital Partners] as strategic equity investors in the company is a big vote of confidence in Circle and in the opportunity presented by digital money,” Allaire concluded.
A diverse cast of investors has contributed to the most recent undisclosed seed funding round for blockchain-based, cross-border payments solution provider Align Commerce.
Participants included more familiar names such as entrepreneur Barry Silbert’s Bitcoin Opportunity Corp[1], Adam Draper-led Boost VC[2] and hedge fund Pantera Capital[3]. The round also included traditionally payments-focused VC firms such as Bayhill Capital Management, NyCa Investment, Pivot Holding, Fenway Summer, R3 and the Whittemore Collection.
Unsurprisingly, not all participants are new to the ecosystem. Fenway Summer[4], for example, previously invested in bitcoin brokerage Circle’s $17m Series B[5] and boasts former deputy director of the US Consumer Financial Protection Bureau (CFPB) Raj Date as its managing partner.
Align Commerce[6] CEO Marwan Forzley framed its diverse set of backers as evidence of the increasing interest in using both bitcoin and its underlying payments rail, the blockchain, as a tool to lower the costs of cross-border payments.
Forzley told CoinDesk:
“When you think of the seed funding, it’s an illustration of a very interesting use case, which is payment processing on the blockchain.
Forzley indicated that the total raised was not disclosed due to “internal purposes”, stating that future announcements regarding fundraising were “coming up”.
“I think the key thing is a lot of the investors are into the use case and attracted because this is a really interesting way to build up the ecosystem,” he said.
A graduate of Boost VC’s Tribe 4, Align Commerce entered beta at the beginning of this April and is now available in 34 countries. Forzley previously founded eBillme, an alternative bill payment startup that was sold to Western Union in 2011.
Enhancing processes
Forzley indicated that the funding would be used to built out the company’s sales and logistical processes as it looks to market its solutions to international customers.
“We’ve built all the plumbing that’s necessary and now this is really money that’s necessary to scale,” Forzley said.
The CEO acknowledged the relative difficulty in marketing to a range of potential clients across the globe. For example, he noted one use case in which a wine shop in California might utilize Align Commerce to reduce the cost of ordering product from Europe.
In such an instance, the company’s US and German clients would send fiat payments as accustomed. Align Commerce would subsequently transfer the funds to bitcoin, using the blockchain to transmit the payment abroad.
Getting the word out, he said, would be instrumental in the face of the many industries that could potentially benefit from its approach.
“It’s a new product and an elegant way to solve a really interesting problem,” he continued. “The challenge now is to find ways to explain to the business community that here’s a way to pay and get paid in a better cost, time and experience than you do today.”
Bitcoin vs blockchain
Perhaps most interesting is Forzley’s description of Align Commerce as a “blockchain company” given that, to transmit payments over the network, it must transact in bitcoin.
Commenting on this general industry trend, Forzley suggested that the term “blockchain” was simply better suited to explaining the capabilities of the bitcoin network Align Commerce is seeking to use.
“The first is a concept of a global currency and that’s very different than the concept of moving money from point A to point B, and that’s why you’re seeing two different words used,” he said.
Still, Forzley said this use case would benefit the entire bitcoin ecosystem.
Should Align Commerce be successful, he suggested, the company would create liquidity and bring new business to existing exchanges.
However, he concluded by noting his belief that the means to promote the network in this way is already available.
“We don’t need to build, we can solve this problem today with technology that exists.”
