Coinsetter launched their Bitcoin trading platform on Nov. 13 after a great deal of anticipation and buildup.
Coisetter was able to raise a round of venture capital, closing a $500,000 financing deal in the spring that was led by the Bitcoin Opportunity Fund and Tribeca Venture Partners.
What Coinsetter aims will set their platform apart is its client base, both American and international; a novel take on regulation; and the offer of great liquidity.
As a Bitcoin exchange based out of New York — a state whose government is highly interested in Bitcoin businesses — Coinsetter has a minefield of regulations it has to navigate. This includes securing a banking relationship with a US bank that is rules compliant, something most other Bitcoin exchanges have yet to pull off.
Coinsetter is also currently obtaining money transmission licenses from the state, a process that could take another 12 months.
Meanwhile, Coinsetter customers will not be able to directly exchange Bitcoins for hard currency. Instead, traders will be able to work with a derivative that reflects Bitcoin’s trade value. According to Coinsetter, this will allow customers to hedge long positions on Bitcoin, something not possible when trading the digital currency directly.
Also attractive for many is the way Coinsetter offers liquidity to its customers. This is done by having a sole platform on which to trade Coinsetter’s books as well as books from other exchanges — at a later date, anyway. For now, it’s just Coinsetter’s books plus a growing amount of liquidity thanks to market-making arrangements.
Security is always of utmost importance in Bitcoin exchanges, and the company’s support department says this will be supported by using offline machines that “never touch the internet.”
Bitcoin addresses are generated offline, and the public keys are transported to production servers. For now, deposits and withdrawals are processed manually. The withdrawal process, done via Armory and with an offline wallet, will continue to stay offline and be processed manually for the foreseeable future.
Coinsetter was founded by Jaron Lukasiewicz, who was previously an associate of a Houston-based private equity firm. His initial idea was to develop a platform that offered margin trading and gave clients the ability to short the digital currency. However, seismic changes — including the huge gains made in value and ever increasing regulations — forced Lukasiewicz to pivot and focus on creating a fast platform with reliable banking support and deep liquidity.
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