Last year in December, Bitcoin Central, the leading Bitcoin exchange in France, shocked the Bitcoin world with an announcement which at the time was the first of its kind: a formal partnership with Aqoba, a licensed payment services provider – a classification which Bitcoin Central’s David François described as “exactly what a bank does, minus the issuing of credit”. Thanks to Aqoba, Bitcoin Central users would have the fiat portion of their funds stored in an actual, federally insured, bank account, which they could send money to via traditional mechanisms like wire transfer. Unfortunately, the agreement never came to fruition. Weeks and then months passed without any further progress in the implementation, and by April Bitcoin Central was forced to shut down for unrelated reasons involving security. The exchange now plans to start again with another payment processor when they come back online.
Now, the leading Bitcoin exchange in Germany has just announced that it is doing a very similar thing. Bitcoin.de, a Bitcoin exchange that has been bringing together Bitcoin buyers and sellers since August 2011, has announced a partnership with Fidor Bank through which the exchange will integrate with the bank directly. Understanding exactly what this integration is first requires a knowledge of how Bitcoin.de works. Bitcoin.de is not a typical exchange; rather, it is a hybrid between a typical exchange and localbitcoins.com. The exchange maintains an order book, charts, an internal Bitcoin wallet and many of the other trappings of a typical exchange, but trades happen between buyers and sellers directly. As the original post (German) explains:
On our portal users can easily sell bitcoins to other users or buy from them. To do that users must register at bitcoin.de and, insofar as they want to be sellers, transfer a quantity of bitcoins to their bitcoin.de account. Once a buyer is found for their bitcoins, the payment information is automatically sent to the buyer. The payment takes place directly between buyer and seller. As soon as the payment has arrived at the seller, the bitcoins are transferred for a small fee from the seller’s account to the buyer’s.
Buyers and sellers have some latitude in choosing their payment option, and, as it turns out, Fidor Bank is a popular option. The problem was, however, that the process of making a full transaction, from the buyer receiving the seller’s banking info to making the payment and finally the seller confirming that they received it, would take as long as 1-3 days to complete. Now, Bitcoin.de chief Oliver Flaskämpfer writes, “through the cooperation with Fidor Bank over the next few weeks our customers will gain the possibility of trading bitcoins almost in real time on a free FidorPay checking account.” Anyone with a legal residency in the European Union, Iceland, Liechtenstein, Norway and Switzerland will be able to get one of these accounts, and they would then be able to either use that same account as their bank account or send money to it by bank transfer much like one would deposit to BitStamp. Compared to BitStamp accounts, however, bitcoin.de will have one huge advantage. “While customers of foreign Bitcoin exchanges must transfer their money abroad into non-insolvency-protected company accounts,” Flaskämpfer continues, Bitcoin.de customers’ money will be stored in their own bank accounts with EU deposit insurance of 100,000 EUR per customer per account.”
This is significant in multiple ways. First of all, it essentially elevates bitcoin.de to the status of a fully-fledged Bitcoin exchange. Anyone in the EU wishing to exchange bitcoins can wire money to their FidorPay checking account, and then use that balance to buy and sell bitcoins at will on bitcoin.de – just like a BitStamp account (or MtGox account or BTC-E account). Second, this is an EU-wide, and possibly worldwide, first as a formal cooperation agreement with a bank, and not a lesser classification like a “payment services provider”. Finally, this agreement appears to be considerably more likely to actually come to fruition. According to heise.de, “the cooperation should start once the banking regulator BaFIN gives its approval”. Technically, approval is not even necessary, but after recent regulatory clashes in the US Flaskämpfer prefers to give BaFIN the opportunity to look through the agreement first just in case.
Altogether, this is a strong step in boosting what has already become a powerful German Bitcoin community, and hopefully the agreement will go through as planned. “In the future,” heise.de reports, “Bitcoin.de also wants to offer their own Bitpay-style payment service, which should allow merchants to receive business transactions with Bitcoin. For that a BaFIN license is necessary, It would take until 2014 to satisfy all the requirements, Flaskämpfer said. An exchange with an automatic trading system would then be the next step.”