Operating under the premise “it is better to ask forgiveness than it is to get permission,” Coinbase opened the first U.S.-based Bitcoin exchange on Monday, backed by investors including the New York Stock Exchange and various venture capital firms, such as Andreesen Howrowitz. Click here to access the exchange. The exchange gives bitcoin enthusiasts an opportunity to trade nationally, rather than on overseas exchanges which have been accused of diminished stability and security. Coinbase claims it has layers of security in place to prevent hack attacks such as the ones on Mt. Gox and Bitstamp.
The exchange is expected to bring further legitimacy so the currency due to the insurance offered to traders, diminishing the risk their investments will not disappear. It is hoped that this increased legitimacy will bring more investors to the currency, and help boost the value of bitcoin itself.
Campbell R. Harvey, professor of finance at Duke University, says,
To have an organized exchange that has the backing of thoughtful venture capitalists and investors addresses one of the main problems with bitcoin: its extreme volatility…Bitcoin has been sorely in need of something like this.”
However, recent allegations suggest the exchange has so far operated without proper license in the state of New York. Matthew Anderson, spokesperson for Benjamin Lawksy, superintendent of the NY Department of Financial Services, says,
We are working with several companies, including Coinbase, on licensing and will continue to move forward expeditiously… That said, we have not yet issued any licenses to virtual currency firms.”
Furthermore, the California Department of Business recently sent out an alert warning,
California consumers should be aware Coinbase Exchange is not regulated or licensed by the state.”
Currently the Coinbase exchange is limited to users in the U.S., but plans to expand overseas. The Winklevoss twins have also announced similar plans to open a U.S.-based Bitcoin exchange, in hopes of bringing the currency to the mainstream. However, the brothers say they are holding off until the exchange receives approval from Lawsky.
Read more here- “First U.S.-Based Bitcoin Exchange Opens,” (Chris Isidore, CNNMoney)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.