One of the most popular bitcoin exchanges has partnered with Barclays via a banking relationship. Their partnership helps skeptical UK lenders who attempted to stay away from cryptocurrency after obtaining scrutiny from government institution.
Coinbase is a San-Francisco based startup that is also known for creating GDAX for professional traders. On Tuesday, it announced that their UK subsidiary made a bank account provided by the British bank.
Due to this partnership, it makes it easier for UK Coinbase customers to withdrawal and deposit cryptocurrencies on its platform. Previously, users had to use an Estonian bank to process their transactions.
The partnership marks the first cryptocurrency exchange to work with a British bank. There are hundreds of crypto exchanges that attempt to do so to meet the digital asset market’s demand. Most of the exchanges are unregulated, so Coinbase’s partnership makes a turning point in the company’s long-term business plan.
In March 2018, Japan suspended two crypto exchanges. Mark Carney, the Bank of England’s governor stated that crypto exchange trading should have similar regulation rules as traditional securities trading.
Many banks have banned relationships with crypto-based startups because they are concerned that they are connected to crimes such as terrorism financing and money laundering. However, most exchanges in Europe work with private lenders in foreign countries that welcome crypto’s financial tech, such as Poland and Gibraltar.
Also, Zeeshan Feroz, Coinbase’s chief executive within the UK, stated that the company had a relationship with Estonian banks, but they wanted to have a UK bank so British users could share “a familiar experience.”
Coinbase developed in 2011 and had gained popularity since its launch. However, it has gained some negative press and complaints from their customers due to their service outages, last year’s crypto trading frenzy, and their slow fund transfers. And, it faces a possible class action lawsuit and is known for employee insider trading.
Coinbase has spoken to over 10 banks before making a deal with Barclays, Feroz said. A lot of larger exchanges are attempting to legitimize an area where traders are vulnerable to hacking and price volatility.
While this move hampers innovation, banks are reluctant to open bank accounts for crypto-based
Companies because of the fear that the currencies anonymity can expose them to money laundering breaches that go against their regulations. For example, HSBC has created a complete ban on businesses within the money service sector.
However, Barclays has decided to take the risk. Now, they work with Circle (a company backed by Goldman Sachs) which utilizes blockchain technology to create a peer-to-peer payment network. In February, Circle bought Poloniex, a popular crypto exchange that receives over $2 billion a month in transactions.
Coinbase stated that they received an emoney license from the UK’s Financial Conduct Authority which help regulates the markets. Due to this, they’re able to use their services in Europe and help UK users invest in cryptocurrency. Thus, we might see a positive change for Coinbase as its now expanded their reach and is legal within the UK territory.
Disclaimer: Our content is not to be used as investment advice. Research any cryptocurrency or crypto startup you’re interested in and do it at your own risk.