Coinapult will no longer be handling the fiat side of its business, instead handing over this side of its operation to Crypto Capital, Inc., a company which is licensed to do business in the United States among other places. An additional side effect of this integration will be that the present limits will be lifted for customers who are verified by Crypto Capital.
Coinapult was founded by Erik Vorhees and Ira Miller in 2012 in Panama, a country with much more progressive financial regulations than the United States. However, the US Bitcoin market is coveted by all Bitcoin businesses, and those who can do business here, do.
In a press release, Coinapult stated:
As a result of integration with a licensed financial institution, Coinapult’s feature product, Locks (TM), will now be upgraded to fully functional buy and sell options, with the ability to deposit and withdraw fiat at any time via Crypto Capital. All Coinapult fiat balances will now be held and insured under a separate Crypto Capital bank account. This is the first step in Coinapult’s longer-term plan to move toward a trustless system. The next step for Coinapult is offering client-side multi-signature support for all users.
The way Coinapult works is the user deposits a fiat value of Bitcoin, and withdraws that amount of fiat later on. The example on their front page makes it pretty plain. The user drops in $500 worth of bitcoins, the user locks that amount at $500, and then later, even if the price has dropped, the user is able to withdraw $500 worth of bitcoins at the new price. Last July, COO Justin Blincoe explained to Upstart Business Journal that the company makes money on the spread:
We make money on the spread when a user Locks or Unlocks. Our margin is always 1 – 2% from our index price (which means the spread is 2-4%). In normal market conditions, it stays closer to the lower bound.
This was further explained via CCN in December:
Now, Coinapult is discounting the Locks service by 25 percent for all customers looking to escape the clutches of price volatility.
Through increased volume, we are now in a position to offer a reduction on our spread, so customers now pay just 1.5% to Lock. We charge no fees for Locking and Unlocking, just a spread, to ensure that we are able to hedge our exposure and keep the system working safely.
The press release provided to CCN provided a bit more information about how the new integration would work for those who are interested. In essence, Crypto Capital is providing the missing link to US customers, giving them a new, regulated banking option that is “Bitcoin friendly.”
Crypto Capital provides a bitcoin-friendly individual or corporate bank account. Users can then instantly transfer funds between their own private accounts and their Coinapult fiat wallets. Coinapult currently supports USD, EUR, and GBP. More currencies are slated for release in the coming weeks. Crypto Capital supports 30 different currencies and can remit funds to over 180 countries. Accounts are insured up to EUR 100,000.
It is hard to determine from here what changes the first licensed Bitcoin bank, itBit, will bring to the overall marketplace. Thus far, Coinapult has weathered nearly three years of volatile markets and remained afloat, even surviving a somewhat serious security compromise earlier this year.
Last modified: May 20, 2015 18:54 UTC