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Coinbase Expands Bitcoin Services to Canada

(@pete_rizzo_) | Published on August 31, 2015 at 14:00 BST
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Bitcoin users in Canada can now buy and sell bitcoin using Coinbase.

The bitcoin services firm, which has raised $106.7m in four public venture rounds, is now available in 27 countries in North America and Europe. The move follows the company's expansion to Europe in September 2014.

CEO Brian Armstrong had previously indicated that Coinbase is seeking to extend its services to 30 countries by the end of 2015, a goal he disclosed at the time of the startup's $75m Series C round, announced in January.

As a result of the move, Canadian residents can now buy and sell bitcoin using Canadian dollars (CAD), deposit CAD funds into bitcoin wallets and trade CAD/BTC using the Coinbase bitcoin exchange.

In an interview, Armstrong explained that, while the company has so far found success launching in more developed markets, it remains active in its efforts to extend its services to developing markets. However, he suggested the regulatory environments have so far proven easier to navigate in countries where English language proficiency and technology literacy are high.

Armstrong told CoinDesk:

"It's not where we would want to launch first, it's actually where the partners we have to work with are able to work with us first. But certainly Canada has a huge population of people that are interested in bitcoin that didn't have easy ways to buy and sell it."

The company indicated its legal counsel does not believe Coinbase to be "engaged in any regulated activity" in Canada, a factor that encouraged it to launch its brokerage and exchange services across all Canadian provinces.

Notably, the company's CAD/BTC exchange will be kept in a separate order book, meaning, for now, US exchange users will not be able to access the pair via their US accounts.

"There's certainly an advantage to multiple currency pairs, but we wanted to be more conservative from a legal and regulatory sense," Armstrong continued.

As part of the launch, Coinbase said it would waive retail conversion fees for users of its bitcoin brokerage service through 6th September. Trading fees on its exchange product will not be subject to the promotion.

Wall Street shoe-in

Armstrong also commented on the increasing competition in the US bitcoin exchange space, which has seen the launch or announcements of expected launch by well-capitalized competitors including itBit and Gemini.

While those exchanges may have garnered the lion's share of media discussion, Armstrong feels Coinbase is best positioned to capture investment from this demographic. In particular, he cited the New York Stock Exchange's (NYSE) investment in the company and co-founder Fred Ehrsam's experience at Goldman Sachs.

"If Wall Street is doing to do anything [with bitcoin], they're going to do it with us. Perception here is that we're a shoe-in in the banking crowd," he said.

Coinbase Exchange is currently available in more than 30 states, as well as Washington, DC and Puerto Rico, partly through licenses secured in each jurisdiction. Rival itBit has alternatively secured a New York banking charter, which it has claimed gives it the ability to service customers in all 50 US states.

Though he spoke positively of rival itBit, Armstrong called Gemini's effort, including its recent filing for a banking charter in New York, "embarrassing", suggesting the investors and entrepreneurs behind the project, brothers Cameron and Tyler Winklevoss don't have a reliable track record of product delivery.

Business model questions

As for Coinbase's long-term revenue model, Armstrong said the startup is likely to add additional financial products to its exchange product, potentially including derivatives.

Armstrong described the company's brokerage and professional trading tools as its "Google AdWords", the revenue-generating arm of the firm that will allow it to pursue more innovative, low-cost, consumer-facing services.

Still, he acknowledged that, across the industry, wallets and exchanges are having difficulty raising revenue, but he believes Coinbase is well-positioned to monetize through its brokerage service, given that the company has established a trusted name in the industry.

"It's more an Apple than a WalMart model," he continued. "I think the consumer business is going to be defensible and profitable and allow us to offer the developer platform for free."

For now, he reiterated Coinbase is seeking to build an "open and efficient payment network" for a global user base, emphasizing that its services in Canada are yet another step toward that goal.

Canadian flag image via Shutterstock

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