Coinfloor Plans Europe's First Bitcoin ETF, Adds USD Support

Coinfloor has revealed plans to launch a bitcoin exchange traded fund (ETF) and accept additional fiat currencies as part of its efforts to expand internationally.

Starting immediately, the UK-based bitcoin exchange is allowing customers to make deposits in US dollars, euros and Polish zloty, in addition to the British pound.

The company framed the move as a way for it to transition from a UK-only exchange to a global player in the wider market for bitcoin exchanges.

Adam Knight, chairman and investor with the exchange, said:

"By expanding to dollars, euros and zloty, we are expanding from a UK-only focus to an international one, delivering more value to our UK customers and growing our user base internationally.”

Global plans

Amadeo Pellicce, CoinFloor's chief operating officer, explained that the additional currencies were a logical choice for the exchange.

“The XBT/USD pair is the most commonly traded pair, so our existing customers naturally have the demand to access the additional liquidity in that market, and we are expanding to euros to better service our European customers by supporting SEPA transfers," he said.

While US dollars and euros would seem to support the company's more global goals, the addition of Polish zlotys is perhaps less expected.

However, it makes sense in light of its banking partnership – Coinfloor banks with Poland's PKO Bank Polski, due to the ongoing reluctance of British banks to provide services for cryptocurrency-based companies.

But Poland's burgeoning bitcoin scene is the major factor in making the zloty an option for traders, according to Pellicce, who said:

"We are entering the Polish bitcoin market since it is growing at a rapid pace and the community is very active. Poland also has strong ties to the UK, so we believe that having both markets will naturally bring opportunities down the road.”

CEO Mark Lamb indicated that the reluctance of British banks to back digital currency businesses could damage the UK's potential to become a leader in the bitcoin space, telling the Financial Times: "The [British] banks are very conservative and are not very interested ... in something that could be very innovative and disruptive to what they do."

Exchange trading fund

Notably, Coinfloor also announced a plan to create a bitcoin exchange traded fund, similar to that announced by the Winkelvoss Capital in July 2013.

An ETF is traditionally linked to a commodity like gold, but in this case would give investors access to bitcoin without the risk of direct ownership. Shares could be bought and sold like stocks on Coinfloor's exchange.

Coinfloor would store the bitcoins on "physical keys" within a secure subterranean vault, according to the FT. These stored funds would be further protected by multi-signature authentication to reduce the risk of the bitcoins being stolen by hackers.

“We believe there is significant untapped bitcoin demand that is waiting for a regulated and listed investment product before buying bitcoin," the company said.

Coinfloor further indicated it is currently exploring the "how and where" of launching its physical bitcoin-backed ETF to provide investors with "another route to bitcoin".

Funding expansion

The FT also reported that Coinfloor is likely to close a funding round of around £1m in the next month or so – a sum which will value the firm at up to £8m.

While the exchange would not comment on any forthcoming investment, Obi Nwosu, chief technology officer, did say:

“Coinfloor has extensive plans for growth and we are raising capital to fuel our expansion. We have seen demand for the investment round from our customers and the bitcoin community and are exploring ways to increase the accessibility of the current funding round.”

Zloty image via Shutterstock