Coinbase, a startup backed by $106 million in investor funding, has opened the first bitcoin exchange inside U.S. borders, the Wall Street Journal reports. The new venture is to the first to let users buy and sell bitcoin with a company based in the United States.
Coinbase has previously found success as one of the more consumer friendly bitcoin wallets and payment platforms. Consumers could buy and sell bitcoins from Coinbase, which would in turn purchase the coins from other exchanges and store them on the customer’s behalf. The company has also partnered with companies like Dell (and MONEY’s parent company, Time Inc.) to facilitate bitcoin purchases by acting as a middleman and converting bitcoins to cash.
Now Coinbase is entering the exchange market as well, and hoping to provide legitimacy and security that foreign competitors have lacked. Mt. Gox, a Japanese exchange that once handled 70% of all bitcoin transactions, lost nearly $500 million in bitcoins in a hacking attack and closed in 2014. In January 2015, UK-based exchange Bitstamp announced it lost nearly $5 million when its wallet system was breached. These and similar incidents have inspired new bitcoin regulatory proposals, a warning from the Consumer Financial Protection Bureau, and the mistrust of non-enthusiasts.
Coinbase has tried to allay these fears by winning government support and advertising its safety features. The company has spent about year working to satisfy regulators, according to the journal, and Coinbase says its customers’ bitcoins are insured against theft.
But regulatory approval may soon become more difficult for bitcoin businesses like Coinbase. New York State Department of Financial Services superintendent Benjamin Lawsky has championed his BitLicense program as a new and more stringent way of regulating bitcoin businesses. That program is still under development and is expected to influence bitcoin regulation nationwide.
Coinbase is not the only company interested in starting a U.S. exchange. Earlier this week, the Winklevoss twins announced their own exchange, called Gemini, that would work with American banks and be “fully regulated.”
So far, the markets have responded favorably to Coinbase’s announcement. Bitcoin’s dollar price is up 7% at press time.
Correction: A previous version of this article reported the Wall Street Journal’s claim that Coinbase had achieved regulatory approval in 24 states, including New York and California. That article has been updated to reflect that Coinbase is working to receive regulatory approval and this article has been updated to reflect that change.