Coinbase opens first regulated bitcoin exchange in U.S.

Bitcoin payment firm Coinbase has announced that it will open the first regulated bitcoin exchange in the U.S. on Monday.

Coinbase Inc., a startup backed by $106 million from the New York Stock Exchange, banks and venture-capital firms, said its exchange will offer greater security for individuals and institutions to trade bitcoin and monitor real-time pricing of the cryptocurrency.

The exchange could bring needed legitimacy to the currency, which isn’t backed by a central government and is traded over virtual exchanges, primarily overseas. Coinbase said it has insurance, offering traders some assurance that their money won’t disappear.

Coinbase already offers exchange services in 19 countries overseas, and it said that its work accruing necessary licenses and approvals in the U.S. took five months. The company will only be able to offer services to customers that sign up in states were it is approved, but there are plans to gain approval in further states.

Coinbase’s founders say they have been working for five months to win licenses from state financial regulators. They have regulatory approval in half of U.S. states, including large population centers such as New York and California. For now, Coinbase can do business only with account holders in states where it has approval.

Coinbase will take a small percentage, 0.25%, of most transactions and will take no fees for the first two months, said Fred Ehrsam, 26 years old, a co-founder. The exchange will initially be limited to users in the U.S., but Chief Executive Brian Armstrong, 32, said he plans to expand overseas.

Mr. Armstrong said he expected to attract both individuals and businesses looking to trade bitcoin.

“Our goal is to become the world’s largest exchange,” he said.

Bitcoins are created using high-powered computers that “mine” for the currency by solving complex mathematical equations. They are exchanged digitally either for currency, or goods and services. Ownership and transactions are recorded, anonymously, in a so-called blockchain, which backers say reduces the risk of fraud.

Bitcoin grew to prominence in recent years in part because of the ease with which it can be transferred.

The NYSE’s investment was intended in part to “keep an eye on bitcoin as it matures as a legitimate currency,” President Tom Farley said.

“Any currency relies on its acceptance.” The Coinbase exchange “is an important step for the currency to become socially acceptable.”

Coinbase counts about 2.2 million consumer wallets and nearly 40,000 merchants that use its services. The company has about 75 employees and plans to operate in 30 countries by year-end, up from 19 today.

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