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Coinfloor wants to break Bitcoin laundering stereotype

Even with its continued acceptance as a donation tool and online currency, Bitcoin is still intrinsically linked with sites like the recently closed Silk Road drugs marketplace, that use it as the exclusive currency of choice. It’s also often considered as a tool for money launderers, since it’s simple to exchange dirty money for Bitcoins, tumbler them and your trail is relatively clear. Some companies are hoping to change that image though and one of the newest and most well funded, is Coinfloor.

Its slogan is “Bitcoin for the world,” and its site highlights its interest in helping small businesses, offering Bitcoins at a competitive price in a secure fashion, capable of dealing in high volume and of course, being compliant with all trading standards and industry flagging.

The site officially opens its doors today, letting potential customers sign up with accounts and register, though Bitcoin trading on the site will only be possible starting 5th November. Wired spoke with Coinfloor’s founder, Mark Lamb, who said: “We believe users and traders deserve a trustworthy [Bitcoin] exchange on which to conduct their business. From the start, we’ve been committed to building and operating Coinfloor as a fully-compliant and professional financial services company and we look forward to helping to establish Bitcoin as a mass market asset.”

coinfloor

As it stands, there isn’t that much regulation of Bitcoin, because the UK’s Financial Conduct Authority doesn’t consider it a currency. However, that doesn’t mean Coinfloor doesn’t abide by the rules anyway. Lamb hopes that in the future, the FCA will enforce its regulatory standards on companies like Coinfloor, but in the mean time, the fledgling business will do its best to stick to the straight and narrow.

The team running the show are all young men, with a mix of business acumen and software development history, though CTO James McCarthy also has experience with Bitcoin. Having previously worked at Sun Microsystems, he was also one of the men responsible for the development of the ASICMiner project and for setting up the first virtual Bitcoin stock exchange. They’ve also managed to garner some venture capital from the likes of Passion Capitol and Taavet Hinrikus, who’s claim to fame is being the “first employee at Skype.”

Fees for trading through Coinfloor are decided based on what is described as a “maker-taker” system. “This means that it is free to place orders and the fee is only charged after the trade is matched,” reads the site. “If you place an order onto the order book, which another user then matches, and that trade executes, then you are acting as a “Maker” or liquidity provider and will be charged lower fees. If you place an order which matches an existing order, removing liquidity from the system, you will be charged the “Taker” fee.”

However they aren’t flat rates. The fees for makers are at their worst, 0.3 per cent for £500 trades or less over the preceding 30 days, whereas takers are 0.5 per cent for the same period. However if you scale that up to over £140,000 in trades over the past month, there is no makers fee and the takers one drops to almost half of the maximum.

KitGuru Says: It’s an interesting idea, trying to marry legitimacy with Bitcoin, as it’s counter culture feel still maintains a firm grasp. It’s companies like these though, that stand the best chance of making Bitcoin something that the governments of the world can see as potential growth sectors, rather then a burgeoning threat and hub of criminal activity.

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