A UK-based bitcoin exchange has beat competitors to the post as it opens for business today. London-based Coinfloor begins registering customers at 9am this morning.
The site, launched by Mark Lamb and Amadeo Pellicce, hopes to get in on the market early by offering GBP/BTC trading services before regulators have passed judgement on the cryptocurrency. It beats BitPrice to market. The latter has been lobbying regulators in the UK about bitcoin’s status, but hasn’t opened its doors yet.
Coinfloor, which is backed for an undisclosed sum by VC firm Passion Capital, is the first firm to trade bitcoins for GBP on an order book for at least a year. There are scant other exchanges in the UK trading bitcoins for GBP. Bittylicious offers the chance to buy bitcoins for sterling, for example, although this appears to be a more rudimentary site, and doesn’t have the charting facilities offered by Coinfloor. London-based Intersango ran an order book and allowed GBP trades, although that site inherited hacked and now-defunct virtual currency exchange Bitcoinica. It was sued by customers, and is no longer taking registrations.
“Historically the biggest hurdle for setting up a bitcoin exchange (whether in the UK or elsewhere, but even more so in the US) has been securing a banking partner,” said Stefan Glaenzer, a partner at Passion Capital. In 2012 Mt. Gox had to suspend GBP trading after its Barclays account was discontinued. It is possible to trade GBP for bitcoins on some other exchanges, but getting money out in GBP can involve a premium.
Coinfloor has secured multiple banking accounts from several different partners, he said. At least one of those is a Santander-owned bank, but neither the exchange nor the VC is saying who.
The other barrier to UK exchanges has been regulation. The UK Financial Conduct Authority (formerly the Financial Services Authority) and HMRC are so far not regulating bitcoin, but this creates uncertainty, and talks are ongoing.
“It’s not for us to predict if they may change their view, but if they do, we will be prepared and ready to be compliant given our self-imposed procedures for KYC/AML,” said Glaenzer.
“The maker-taker model encourages liquidity in a financial market, which is something that bitcoin sorely needs at present.”
The firm has also taken the precaution of excluding US users, to comply with KYC/AML rules that it says exceed compliance requirements for a regulated exchange. However, it hopes to open up trading to US users soon.
Coinfloor will offer straightforward trading services via an order book. There will be no margin trading available, but the firm is capitalizing on what it calls a sophisticated algorithmic rounding engine for fee calculation. Instead of simply rounding up its fees, it uses a form of stochastic rounding, which uses an algorithm to determine how a fee is rounded. This makes it suitable for high-frequency professional traders, it says.
Catering for pros will be one reason why the firm is offering maker-taker …read more
Source: CoinDesk
