Amid price volatility and impending regulation, Bitcoin startup Coinbase is launching in the UK.
Decentralised digital currency Bitcoin has had a tumultuous 2015, kicking off the year with a price drop of 30% in a matter of days. But there has also been an influx of venture capital cash into the space, with Coinbase being one of the key beneficiaries.
In January it raised $US75 million — then a new record for the industry. Investors included the New York Stock Exchange and respected VC firm Andreessen Horowitz. (It was subsequently overtaken by the secretive “21”, which raised $US116 million in March.)
Coinbase then went on to launch a Bitcoin exchange, and is now opening its doors in Britain.
So what exactly does Coinbase do? It has a number of products, include “wallets” which allow Bitcoin users to store and make transactions in Bitcoin, merchant solutions for businesses, and its new exchange for trading Bitcoin.
Coinbase’s services are already varyingly available in 24 countries, with 2.1 million wallet holders and 39,000 merchants. But the exchange has yet to expand outside of its native America, making the British launch a first.
Some 40,000 Brits already make use of Coinbase’s wallets in the UK, CEO Brian Armstrong told us, but there has previously been no functionality to convert into fiat currency. So consumers looking to send Bitcoin to other digital currency enthusiasts were fine, but there was no way for Brits to convert it into real world cash on the platform.
Armstrong says the company doesn’t have specific targets for the launch, but that it is part of a broader expansion, bringing the company to 40 countries by the end of the year. Britain is a “financial leader in the world” and Coinbase can’t hope to be “a global movement without liquidity in the UK,” he adds.
The UK is preparing to regulate Bitcoin using anti-money laundering frameworks, with the government aiming to position the country “at the forefront of the development of digital currencies,” making it “the location of choice for digital currency and related tech firms.” London is also the world capital for fintech startups, with more workers in fintech than either New York or Silicon Valley.
It’s a stance that has been lauded by the community.
The director of advocacy group Coin Center told Reuters that Britain has “a different attitude” to the US, and New York’s planned “BitLicense” for digital currency startups. “It’s a very positive attitude, one of: this is an amazing innovation, we’re going to have some kind of regulation in terms of money laundering, but let’s do this in a constructive way, in partnership with technologists and the industry.”
I spoke to Marco Santori, the global policy counsel for rival Bitcoin startup Blockchain. He didn’t comment on comparisons between the US and the UK’s approach, but said British regulators are “learning from the successes and failures of other jurisdictions,” and that their “wait and see approach is paying off.” British regulators are apparently “eager and interested to learn more.”
Silicon Valley funds are pouring into Bitcoin with the promise of taking it “mainstream,” but it’s clear there’s a way to go yet. There’s the issue of price instability for one, and the community has also been recently criticised for being overwhelmingly male. Surveys suggest that the majority of people don’t know what Bitcoin is — or don’t trust it if they do.