On January 26, 2015, Coinbase announced that it launched the first regulated Bitcoin Exchange in the United States, and that it is licensed to do business in 25 states, including New York and California.

Coinbase spokesman James Watkins mentioned at Coindesk earlier this week: “The Exchange is also available to users in California and New York. These states fall into a regulatory gray area while they work to establish a framework for regulating virtual currency companies.”

Coinbase’s statement may have artificially inflated the price of Bitcoins as the cyber currency rose to $263. However, it was later revealed by New York’s Department of Financial Services and California’s Department of Business Oversight that Coinbase did not have the licenses necessary to operate as a Bitcoin Exchange in New York or California. Following this announcement, the price of a Bitcoin fell to $233.

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California Department of Business Oversight Commissioner Jan Lynn Owen said in a statement Tuesday, “The California Department of Business Oversight has not decided whether to regulate virtual currency transactions or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.”

Coinbase is countering the allegation with two important facts: Firstly it claims to have full compliance in 14 states, along with indications from 8 other states that these licences were not required to launch the exchange.  Secondly Coinbase is “registered with FinCEN as a Money Services Business (MSB), which means the company itself is regulated at the federal level.” However, Coinbase  is bound to face consequences if the states in question determine that Coinbase operated illegally.

(image source: TechCrunch)

Last week cryptocurrency prices surged following the promises of licensing and regulation (30% in the past two weeks). It came as a respite after last year’s performance where it fell from more than $1,000 at the end of 2013 to as low as $200  in January 2014. At this point it was being termed the worst investment of 2014.

Winklevoss brothers claim to be the first ones to seek regulation. They founded Gemini, a fully regulated, fully compliant bitcoin exchange earlier this month. But licenses don’t come easy. The twins have been waiting for a response from New York’s top regulator for about two years. They stated in their blog: They stated in their blog “Over the past two and a half years, we have spent a great deal of time educating ourselves and others about Bitcoin; investing in bitcoin; investing in Bitcoin-related companies; filing an S-1 registration statement with the Securities and Exchange Commission to create the Winklevoss Bitcoin Trust (an ETF focused on bringing bitcoin investment exposure to main street investors) which will list on NASDAQ; and launching a bitcoin price index called WinkDex that will price our ETF (online, iPhone, Android).”

In recent news, Bitcoin platform Coinbase announced the launch of the first regulated Bitcoin exchange in the US. They, however faced severe criticism from New York and California based regulators. In their defence, they cited age old money transmitter licenses in states including Alabama and Arkansas—which were created decades ago to allow companies like Western Union to send and receive money— as their only form of regulation. They also stated that Coinbase is “registered with FinCEN as a Money Services Business (MSB), which means the company itself is regulated at the federal level.”

In light of these events, Matt Anderson, a spokesman for New York’s Department of Financial Services, told Quartz – “We are working with several companies, including Coinbase, on licensing and will continue to move forward expeditiously,” but clarifying- “That said we have not yet issued any licenses to virtual currency firms.”

Regulation will help bring Bitcoin into the mainstream so it’s “easy and accessible for the average person,” Coinbase’s head of government affairs John Collins tells Quartz. If Bitcoin becomes standardised it could become as mainstream as credit cards as a form of payment which is good news for virtual currency enthusiasts.

(image credit: BTC Keychain)

Coinbase, the San Francisco, US based provider of bitcoin wallet and exchange service, has secured the largest investment in a Bitcoin startup ever through a $75 million Series C financing round closed earlier this week.

Led by DFJ Growth, with existing investors like Andreessen Horowitz, Union Square Ventures, and Ribbit Capital participating, the round also saw renowned capitalists such as The New York Stock Exchange, a subsidiary of USAA, and BBVA (a large multinational bank) along with individual investors like former Citigroup CEO Vikram Pandit and former Thomson Reuters CEO Tom Glocer pooling in. The total investment in the company so far has gone up to $106 million, announced a Coinbase blog post.

Coinbase CEO Brian Armstrong told CoinDesk: ”I think this just really changes the conversation. There’s smart money out there that is betting big on this and is totally unphased by the whims of the price and what the market is doing. They’re much more concerned about the fundamentals of what’s happening in the network … and across those metrics, everything is looking great.”

The funds will ensured the continued global adoption of Bitcoin, fueling the efforts to make it a mainstream entity and with the involvement of respected institutions in this round things might just get better.

Coinbase like many other startups hasn’t released its financial statements and the status of its profitability remains unknown. However, the company still claims growth with 2.1 million consumer wallets, and more than 38,000 merchants using Coinbase services, points out Wall Street Journal.

While speaking to Coindesk about the global outreach strategy Armstrong noted that area of interest will be underbanked territories, “areas that are underserved by traditional payment systems right now, areas where people’s next alternative is dramatically worse.”

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(Image credit: BTC Keychain, via Flickr)