Coinbase, the largest bitcoin broker has acquired an e-license in the UK. At the same time, the exchange has opened an account with Barclays Bank expected to further ease crypto-fiat transactions.
The move comes when other banks have recently barred customers from using their issued credit cards to purchase cryptocurrencies.
Coinbase now looks at supporting institutional investors enter the cryptocurrency space under the Fast Payments Scheme.
“U.K. customers will benefit from faster, safer and seamless bank transfers. We will start with a pilot, giving a small number of institutional users access to Faster Payments. In the coming weeks, we will begin rolling out to all U.K. customers, making the Coinbase experience increasingly easier,” Coinbase UK CEO Zeeshan Feroz said in a blog post after the deal.
Barclays has long had an interest in getting involved in cryptocurrencies dating back to mid-2017.
Until now, UK users had to have their money processed through Estonia, a process that took a lot of time. For withdrawals from Coinbase, the money had to be converted first to Euros then to Pounds which meant more exchange rate charges.
It will be interesting to see how the company will comply with strict Know-Your-Customer and AML policies required of banks. The San Francisco company is, however, know for regulatory compliance and close connection with government. It has over 12 million customers.
The cryptocurrency industry is known for its opacity, a fact that has made many banks stay away from any dealings.
The e-license issued by the Financial Conduct Authority effectively allows Coinbase to issue e-money and provide payment services. The license also opens the market of 23 European countries to Coinbase.
Europe is one of the regions that has seen a rapid growth in cryptocurrency investments in the past one year. Coinbase recently opened a UK office to tap into this huge market.
The move comes amid increased calls for more regulations to tame the industry that has been described as the “wild west.” The market is marked by high volatility and is largely unregulated.
Mark Carney, Governor, Bank of England recently called for more regulations of the sector terming recent price movements as “speculative mania.”
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities,” he said recently.
Carney said he was concerned about its use for illegal activities and as a potential threat to the financial system.
Bank of England’s Financial Policy Committee is said to be looking at the risks posed by cryptocurrencies on the financial system. Carney was, however, quick to downplay any threat given the relatively small size of the cryptocurrency market.
This week, the European Banking Authority, European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority also sounded warnings against cryptocurrency investments for what they called a pricing bubble, lack of transparency and consumer protections
Zeeshan Feroz, Coinbase UK CEO said the company is looking for more partnerships with other banks.
Coinbase already has a partnership with LHV, an Estonian bank.