Bitcoin took a potentially big step toward legitimacy in the U.S. today with the launch of the nation’s first licensed exchange for the virtual currency. Now, it’s up to San Francisco startup Coinbase to convince would-be traders that its platform is a safe and preferable place to put their money.
Founded in 2012, Coinbase has so far received the green light from regulators to serve residents in nearly half of U.S. states, including New York, California, Massachusetts, Washington, and Wisconsin.
Coinbase’s investors have pumped $106 million into the company, including a $75 million round that closed this month, the Wall Street Journal reported. Its backers include the New York Stock Exchange, USAA Bank, the venture arm of Spain’s Banco Bilbao Vizcaya Argentaria SA, Andreessen Horowitz, and Union Square Ventures.
Coinbase’s early approvals by state regulators and the backing of major financial institutions and venture capital funds could go a long way toward bringing the company’s exchange—and the controversial bitcoin currency itself—into the American mainstream.
The fledgling digital currency and its early adopters have certainly taken their lumps. Bitcoin has been dogged on overseas exchanges by unpredictable swings in price, recently dropping to around $240 from its zenith of more than $1,200 in late 2013. Last year, around half a billion dollars’ worth of bitcoins went missing from Japan-based exchange Mt. Gox, which then filed for bankruptcy. That’s not the only bitcoin exchange to come under attack by hackers; a few weeks ago, there was a security breach at Bitstamp, a Slovenia-based bitcoin exchange.
Coinbase says it has insurance against theft or loss of bitcoins, which could help alleviate concerns about the safety of users’ funds. The company currently counts about 2 million individuals and 38,000 businesses that use its services.
The launch of Coinbase’s exchange comes on the heels of bitcoin advocates Cameron and Tyler Winklevoss, the twin brothers known for their legal battles with Facebook CEO Mark Zuckerberg, announcing plans for their own bitcoin exchange, Gemini.
