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Coinbase to Open First U.S. Bitcoin Exchange

The move could increase trust in the digital currency among U.S. consumers and perhaps bring more stability to the price of each unit of bitcoin.

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Bitcoin is set for a big credibility boost.

On Monday, the bitcoin startup Coinbase is set to open the first regulated bitcoin exchange based in the U.S., in a move that industry observers have long said could increase trust in the digital currency among consumers and perhaps bring more stability to the price of each unit of bitcoin.

The launch comes a few days after the Winklevoss twins, of Facebook notoriety, announced plans for their own U.S. exchange. Last week Coinbase announced a $75 million investment from investors including the New York Stock Exchange and Spanish bank BBVA.

The exchange will be open to individuals and institutional investors in the two dozen or so states in which Coinbase has received regulatory approval. Coinbase will take a 0.25 percent cut of each transaction, according to the Wall Street Journal. Coinbase has previously offered a broker-like service that allows individuals to buy, sell and store bitcoin. It also sells a payment processing service that allows merchants to accept bitcoin from their customers.

While supporters believe the bitcoin payment network has the potential to revolutionize industries from payment processing to remittance, the lack of a regulated U.S. exchange has limited its appeal. Up to now, the biggest bitcoin exchanges have operated outside of the U.S., in countries like China, Japan and Slovenia. Two of the biggest exchanges have suffered large breaches, including the now defunct Mt. Gox which saw hundreds of millions of dollars in customers’ bitcoin go missing along the way.

These events, combined with the fact that bitcoin moves through a peer-to-peer computer network outside of government control, have scared away some would-be investors. The hope is that a regulated U.S. exchange, operated by a well-capitalized company with a wide range of respected financial backers, will be more secure and can attract a new set of consumers to bitcoin. That, in turn, could increase market liquidity and potentially help stabilize the price of bitcoin, which had fallen about 75 percent in the last year as of last week. Bitcoin backers acknowledge that the volatility in bitcoin’s value needs to decrease if bitcoin is going to live up to its hype.

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