In a symbolic move for the cryptocurrency market, Barclays has accepted a bitcoin exchange as a client. It is the first UK bank to do so, and the agreement has the potential to significantly boost the usage of cryptocurrency exchanges in the region.
The client is Coinbase, a Bitcoin exchange based in San Francisco. The company is one of the top 10 bitcoin exchanges in the world by volume. In its new agreement with Barclays, Coinbase has been granted permission to open a Barclays bank account.
When announcing the move on its website, Coinbase discussed the UK market; drawing upon the fact that its customer base in the UK was growing at twice the rate of other countries in Europe. Furthermore, a Coinbase spokesman said that the company had met with many other banks and ultimately opted for Barclays.
Coinbase clients, he said, will be able to make deposits more easily, and withdraw funds from their cryptocurrency account without any hassle. Previously, they had to transfer pounds into euros and go through an Estonian bank. But having domestic payments in British sterling will reduce cost and time spent on transactions, making the overall customer experience better and more attractive to a wider market.
Global banks like Barclays have, so far, been reluctant to do business with companies that handle Bitcoin because of safety concerns and the uncertainty about future regulations in the industry. Indeed, the agreement has the potential for controversy, as it comes at a time when exchanges like Coinbase have faced more and more regulatory scrutiny. Mark Carney, Bank of England governor, has backed the requirement for increased scrutiny. On top of this, both Lloyds and Virgin Money said they would ban credit card customers from buying cryptocurrencies, following the lead of JP Morgan and Citigroup.
A spokesman for Coinbase has said that it took considerable time to get a UK banking deal. Before committing to the agreement, Barclays had to be certain that Coinbase had all the correct systems in place to stop money laundering.
With the first cryptocurrency agreement in place, the UK’s financial institutions face a quickly evolving market.
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