Coinfloor to Become First 'Publicly Auditable' Bitcoin Exchange

Coinfloor will be "publicly auditable", allowing users to validate the company's records and compare them to the bitcoin ledger.

AccessTimeIconApr 16, 2014 at 8:13 a.m. UTC
Updated Sep 11, 2021 at 10:39 a.m. UTC
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UK-based bitcoin exchange Coinfloor announced a slew of new updates today, including an over-the-counter (OTC) market for large, institutional bitcoin traders and a "proof of solvency" audit process.

Coinfloor is now also offering 0% commission for all clients for 60 days. The service updates notably follow the exchange's re-opening of user registration on 27th March, which had been delayed since November.

Perhaps most notable of the announcements was the opening of the OTC market, which Coinfloor suggested would pave the way for institutional investors to begin exploring bitcoin.

Said Coinfloor CEO Mark Lamb:

"In speaking to a number of equities exchanges, we found the appetite for new products remarkably positive. Brokers, proprietary traders and the rest of the financial community are curious and excited about the opportunities that Bitcoin presents."

The announcement is notable as it indicates that a similar strategy to the one pioneered by SecondMarket and Bitcoin Investment Trust CEO Barry Silbert is also finding success overseas. Silbert discussed his vision for opening up bitcoin investing to the general public widely earlier this year, and his plan involved finding an acting market maker and using an OTC exchange.

Lamb indicated that Coinfloor has also partnered with a regulated firm to provide this support.

Emphasizing liquidity

Speaking broadly about the past failures of bitcoin exchanges, Coinfloor discussed that auditing is necessary, as bitcoin businesses are essentially third parties that must be granted trust.

Part of this process will be making Coinfloor "publicly auditable", thereby allowing users to validate the company's records and compare them to the bitcoin ledger.

Read the announcement:

"For the first time, the company will permit access to its books to reassure users that client funds are safe – and that the company is not only solvent but wholly reliable as a trusted partner."

OTC markets and 0% commissions

First unveiled during France's TradeTech conference last week, Coinfloor said its OTC market aims to bring added liquidity to its exchange.

Further, it urged others in the industry to follow its lead, explaining:

"With a market cap greater than $5bn, but a 24-hour global trade volume of less than $100m, bitcoin markets need to make concerted efforts to facilitate a much higher level of liquidity in order for the currency to succeed."

Coinfloor also reduced trade commissions for a limited time, revealing it will waive all trade commissions to all interested parties through 15th June.

Bitcoin in the UK

To date, Coinfloor is the only UK-based bitcoin exchange, though others are reported to be in development.

Still, despite being the new home of the Bitcoin Foundation, the UK has struggled somewhat to build a strong community of bitcoin businesses, though notable projects include ZipZap and a real-time bitcoin price tag.

One factor for this was the 20% value-added tax (VAT) formerly imposed by the HMRC, the UK's tax authority, on all trading. This VAT was later removed with help from members of what would later become the UK Digital Currency Association, which officially launched on 24th March.

Audit image via Shutterstock

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