Events surrounding the means by which digital currency transactions are carried out have given way to a litany of speculative opinions which now adorn many crypto-currency related forums and portals, the most recent being the US government’s seizure of Silk Road.
The flipside of this is the institutionalization of certain virtual currencies, as digital exchanges begin to partner with online banks. Today, the recently established Kraken digital currency exchange has fostered an exclusive partnership with German online financial institution Fidor Bank, regulated by German Financial Supervisory Agency BaFin, in order to provide Kraken’s customers in the European Union with traditional banking facilities.
With the demise of high-profile anonymous marketplaces at the hands of the authorities, and other lesser known ones of their own accord during the course of this month, the image of virtual currency in the eyes of the world’s financial institutions and government bodies now faces a pivotal position.
Although, this is the first currency-neutral digital currency exchange to partner with a regulated banking institution, it is not the first time that Fidor Bank has demonstrated an interest in extending banking facilities to holders of digital currencies, having partnered with marketplace Bitcoin Deutschland GmbH in July this year.
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According to Payward Ltd, which is the company which developed Kraken, this partnership represents the first of its kind between a licensed, insured bank and a digital currency exchange, therefore facilitating security for its users, and assisting the growing legitimacy of Bitcoin, Ripple, Ven and other digital currencies.
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In a corporate statement, Jesse Powell, CEO of Payward Ltd said, “Our goal from the beginning has been to establish Bitcoin and other digital currencies as wholly legitimate complements to the Euro, the Pound and other traditional, government-issued currencies.”
“In Fidor Bank we’ve found our ideal partner, a forward-thinking financial institution that’s fully on board with our stated goal of combining the predictability and stability of traditional banking relationships with the social and economic benefits of the new digital currencies. We’re thrilled to be able to offer these services to customers in the EU, and hope to offer more services globally soon,” continued Mr. Powell.
Matthias Kröner, CEO of Fidor Bank, further added that: ‘Our long-term goal is to identify innovations on the financial markets, and find ways of making them available to our business partners and private clients.”
“We have a responsibility as banks to drive innovation in our ecosystem. Bitcoin has established itself as a serious alternative digital currency, and Kraken makes it possible to trade bitcoins as securely, easily and flexibly as any foreign currency,” concluded Mr. Kröner.
While this is the first partnership of its kind, Payward considers it highly unlikely to be the last. “Banks have been reluctant to enter the digital currency space but now that Fidor has moved into the market, we believe others will follow, once they see that these alternative currencies are compatible with full regulatory compliance,” concluded Mr. Powell.
By making its way into the traditional banking system, digital currency is bridging a gap of legitimacy and security, whilst retaining its borderless appeal and value as an anonymous method of payment which is free from government interference, capital controls or local economic woes. If other banks follow, the regulatory stance may become somewhat different.