Exchanges Bring Increased Legitimacy for Bitcoin

After months of doubts regarding the viability of Bitcoin due to concerns on everything from fraud and security to the currency’s volatility, the virtual currency recently got a healthy boost to its legitimacy.

Last week, Cameron and Tyler Winklevoss announced plans to develop a fully regulated Bitcoin exchange based in the United States, dubbed Gemini. Gemini hired top engineers, cooperated with regulators, and signed on an American bank to launch the exchange, which is expected to begin operations once it receives regulatory approval from the State of New York.

Meanwhile, the Wall Street Journal reported that starting today, Lunar, a business vertical of Coinbase, will make its debut as the first licensed U.S. Bitcoin exchange. Coinbase has raised over $100M in funding from the likes of the New York Stock Exchange, banks, and venture capital firms. Coinbase’s exchange aims to be a secure option for traders, as it has insurance and, as a licensed exchange, will provide assurances that customers can recover their money in the event of theft.

Coinbase is limited to doing business with account holders only in states where it has regulatory approval, and so far it has such approval in 25 states including New York and California. In New York, Coinbase will be operating under earlier regulations, not the anticipated BitLicense previously discussed on this blog, which is expected to be unveiled this year. The full list of states and the specific licenses the company has in place have not yet been disclosed.