Bitcoin becoming Regulated Currency in the European Union
Slovenian startup Bitstamp just did something that no other digital currency startup was able to do – launch the first nationally licensed Bitcoin exchange (BitEx). As it usually goes, the startup could not receive a license in its home country, so it took advantage of registering themselves in one of most business-oriented countries in the European Union.
Luxembourg granted the license which will be valid in all 28 EU countries, meaning starting July 1, 2016 – 508 million EU citizens should be able to access a Bitcoin exchange under the same operating restrictions and protections as the banks and stock exchanges.
“We believe that this is stability-inducing – that people will see this as a sign of Bitcoin going mainstream,” said Nejc Kodric, co-founder and Chief Executive Officer. “It also allows us to be taken seriously and partner up with more serious institutions, because we had a lot of discussions in the past but it always comes to a point where there’s no one overseeing us, and bigger financial institutions are still reluctant to work with unlicensed companies doing [financial technology].”
Even though they originated out of Slovenia, Bitstamp official website focuses on locations in internationally recognized banking centers (UK, Luxembourg, USA), but this just might be a second or third unicorn to have come out of Slovenia (first one being Outfit7, publishers of popular educational apps such as Talking Tom). Company mission is best described through their motto: “We believe bitcoin is here to stay. Our goal is to provide reliable easy to use service for companies and individuals to exchange bitcoins.”
This is perhaps the biggest move towards ‘mainstreamization’ of bitcoin as a (crypto)currency. Over 508 million people are now getting regulated access to Bitcoin. If you’re not an EU citizen, worry not. Countries such as Croatia and Estonia enable everyone to get EU-recognized UIN (Unique Identification Number), meaning you should have no issues opening a bank account inside the EU-28 bloc.
Naturally, you can trade solely on the Bitstamp exchange, without UIN/SSN style identification – or bank account connected to the exchange, but the reality is that credit cards are not as pervasive as people living in ‘plastic societies’ are. For example, in United States you’re not liable for the fraudulent behavior on the card, while in most EU countries that ‘liability’ goes only to $100/€100, after which you are screwed. Thus, a lot of countries in the EU shrug credit cards and using them for personal finances.
The case of Bitstamp shows that it is European Union also has loopholes which allow for disruptive business models to thrive. While U.S. is most famous for Delaware (one single address in Delaware is a home to 285,000 companies, including Bank of America, Coca-Cola and Google), Nevada (LLC haven) and California, EU is often criticized that it does not allow for development of a similar model. EU countries such as Luxembourg, Liechtenstein, and two tax havens called Monaco and Guernsey (part of Commonwealth) – can offer startups legal abilities you can’t pursue in other countries.
You can open a Bitstamp account today, and as of July 1st, 2016 – it will be as regulated as every other exchange organization operating in the European Union. That will make this exchange more in line with NYSE, NYMEX, Boerse Franfurt and other regulated entities.