Yesterday, Coinfloor, the only UK-based Bitcoin exchancge, announced a series of new services including over-the-counter (OTC) market for institutional Bitcoin traders as well as a “proof of solvency” audit system. 

Legitimacy means investment 

According to the company’s blog, Coinfloor is “looking to provide the most secure, accountable and liquid exchange in the world.” Citing current problems of security, trust and liquidity in Bitcoin exchanges, Coinfloor announced that it had partnered with an Financial Conduct Authority (FCA) regulated trading firm to launch an OTC Market for financial institutional to trade large blocks over a Request for quotation (RFQ) type system. Coinfloor has also announced that it this OTC platform is offering 0% commission for all clients until June 15. 

Coinfloor CEO, Mark Lamb, stated: 

“In speaking to a number of equities exchanges, we found the appetite for new products remarkably positive. Brokers, proprietary traders and the rest of the financial community are curious and excited about the opportunities that Bitcoin presents.” 

The company believes that this “will increase liquidity to our central limit order book and also to the Bitcoin markets as a whole.” This approach seems to toe the line with Barry Silbert, CEO and Founder of SecondWatch, who recently broke down the development phases of Bitcoin and emphasized that increasing the money base of Bitcoin via an influx of investment capital from Wall Street is vital for Bitcoin’s future prospects if it hopes to become a global payment system. 

Coinfloor is striving to fully legitimize their business as the exchange is already registered with HM Revenue & Customs (HMRC) as required by UK money laundering regulations for most money service businesses. It also prides itself in its strict anti-money laundering stance and “know your customer” procedures even though Bitcoin is not considered to be money by the FCA. 

Goldman Sachs has recently announced that it sees much promise in Bitcoin estimating that it could save retail, e-commerce and remittance sectors $US 210 billion (£125 billion) annually. However, this depends on a significant influx of capital from the financial sector, an event which is supposedly “three to four months away,” according to Barry Silbert. 

Publicly “auditable” 

Citing recent failures such as Mt. Gox, Coinfloor asserted that by being “publicly auditable” exchange, users will be able to check company records and compare them to the official Bitcoin ledger. In their view, this is essential in the process of earning the trust of third parties and other users as everyone will be able to verify that the exchange is solvent. 

Coinfloor announced: 

“For the first time, the company will permit access to its books to reassure users that client funds are safe – and that the company is not only solvent but wholly reliable as a trusted partner.” 

Security or freedom 

However, while Coinfloor’s uber-compliancy approach certainly raises the bar as far as anti-money laundering goes along with its 100% cold storage policy where information is never stored on a server, the idea of identity verification directly clashes with Bitcoin’s premise as a decentralized, nation-less and, most importantly, anonymous currency. 

While people like Mark Lamb and Barry Silbert are undoubtedly helping raise public awareness with respect to Bitcoin, they also shun the ideology behind cryptocurrencies as an anonymous means of exchange that bypasses the banking system. Instead, they see Bitcoin entering the mainstream as a global payment player only within the current financial regulatory framework. 

Meanwhile, most hardline Bitcoin enthusiasts such as Andreas Antonopolous see the cryptocurrency technology as a liberating tool that will eliminate big business, which privatize profits and socialize risk due to secure copyright laws, regulations and by hobnobbing with the state. 

In fact, most Bitcoin proponents would argue that the cryptospace doesn’t need any regulations at all while any attempts to do so while dangling the Wall Street-money carrot have been interpreted by many users as a way to perpetuate the financial status quo. 

This all begs the question: Does Bitcoin need the backing of Wall Street and other financial institutions in order to thrive and prosper? While Mark Lamb and Barry Silbert certainly think so, others in the Bitcoin community see it as a grassroots movement and as a technology that has the potential to free humanity. 

Cointelegraph would love to hear your opinion on the matter.