The exchange could also bring needed legitimacy to the currency, the article noted. Coinbase said it had insurance, offering traders some assurance that their money won’t disappear.
Bitcoin has suffered the collapse of Japan-based exchange Mt. Gox last year, the article noted. Bitcoin also suffered a security breach earlier this month at Slovenia-based exchange Bitstamp. The value of a bitcoin itself, determined by trading on existing exchanges, has fallen to about $240 from a peak in late 2013 of above $1,200, The Wall Street Journal reported (it’s now back above $300!).
Campbell R. Harvey, a Duke University finance professor who has studied cryptocurrencies, has reportedly organized an exchange with the backing of venture capitalists and investors that addresses bitcoin’s volatility, the article noted.
Coinbase’s founders say they have been working for five months to win licenses from state financial regulators, the article noted. Coinbase has regulatory approval in half of U.S. states, including large population centers such as New York and California. For now, Coinbase can do business only with account holders in states where it has approval.
Coinbase will take a small percentage, 0.25 percent, of most transactions and will take no fees for the first two months, said Fred Ehrsam, a co-founder, the article reported. The exchange will initially be available to users in the U.S., but Chief Executive Brian Armstrong said he plans to expand overseas.
Financial regulators, including the Federal Reserve, have been scrutinizing bitcoin recently, the article noted. Benjamin Lawsky, the superintendent of the New York State Department of Financial Services, is working on a so-called BitLicense for firms looking to offer digital currency services in the state.
Coinbase is operating under earlier regulations. Observers have cited Lawsky’s plan as a template for legislation in other jurisdictions, and it may give outsiders more confidence in the currency, the article reported.
Images from Coinbase.
Last modified: July 13, 2020 3:18 AM UTC