Despite the fact that bitcoin has died 39 times (no seriously, there’s a guy who keeps track), today Coinbase, a company backed by over 100M$ in venture capital, including one of the world’s most famous venture capital firms, Andreesen Horowitz, and a little organization called the New York Stock Exchange, took their bitcoin exchange live today in 24 states, including Indiana, California, and New York. Coinbase was founded in 2012, and has been regarded as one of the most reputable places to buy bitcoin, but until now, Coinbase has not offered an actual trading platform. The Wall Street Journal has this article on the launch.
Previous companies like Coinsetter and Kraken have tried to “crack” the US market, but haven’t been terribly successful yet. Coinsetter does not seem to have a way to deposit US dollars, and Kraken, while operating in the U.S., is based in Munich, and isn’t technically a regulated exchange.
Currently, most bitcoin trading is done on exchanges in China, Bulgaria, and Slovenia. The U.S. has been left behind, not because of a lack of technical knowledge or willing entrepreneurs, but because the U.S. laws concerning bitcoin and starting an exchange have been so vague and onerous that no one seemed to have the money and legal heft to push through them. Approval to legally operate the exchange must be granted on a state-by-state basis, so it took an organization with sufficient backing to be able to secure significant approvals.
Why does this matter to you? A legitimate, licensed, US-based bitcoin exchange that is working with the NYSE is a good thing for U.S. citizens who want to trade bitcoins. For one, it should make tax compliance much easier, as U.S. citizens won’t have to hold a foreign account at an overseas exchange and worry about FBARs and other overseas tax issues. Secondly, traders now have U.S. jurisdiction over a company if they have a dispute. Overseas exchanges have been known to go bankrupt, or steal their users’ funds, leaving the user with little recourse except to try to navigate a foreign legal system. Coinbase, on the other hand, could be sued or arbitrated in the United States should a dispute arise.
If you have questions about bitcoin, give us a call! And as always, we accept bitcoin at our firm!