US-based Bitcoin operator Circle has become the first "social payment" outfit to be granted an electronic money licence from the UK's Financial Conduct Authority (FCA).

Circle has also partnered with Barclays, which marks the first time that a major global bank has agreed to work with a cryptocurrency firm.

The company has additionally joined the FCA's Innovation Hub, an initiative established to apparently support "businesses that are looking to introduce groundbreaking or significantly different financial products or services to the market."

Three-year-old Circle allows users to send money to their peers with Bitcoin as an underlying currency. When a payment needs to be sent, the service can charge the sender's bank card, buy bitcoins, send them to the recipient's account, and make the reverse exchange. The idea being that users aren't likely to be in possession of bitcoins long enough to suffer from the cryptocurency's price volatility.

Now that Circle is a licensed e-money provider in the UK, it's able to offer cross-currency transactions between US dollars and pounds sterling, thanks to its partnership with Barclays.

"We can confirm that Barclays Corporate Banking has been chosen as a financial partner by Circle, and we support the exploration of positive uses of blockchain that can benefit consumers and society," a Barclays spokesperson told Ars.

It's understood that the bank's role in the deal is to hold the users' payments in pounds and provide the transactional accounts, while Circle handles the Bitcoin end of the operation. These parts stay legally separated, since under European regulations no bank can hold Bitcoin; while at the same time, Circle lacks a licence to tackle "real money" transactions.

"For the first time any consumer in the US and the UK will be able to beam sterling and dollars back and forth, instantly for free," Jeremy Allaire, the co-founder of Circle, told the New York Times. "That’s just never been possible."

In a blog post, Circle's co-founders said they were "gearing up to bring the same capability to Euro-zone consumers." Since FCA's e-money licence is valid across the EU, and Barclays can theoretically work with Euro accounts as well as GBP, it shouldn't be too long before the third currency is added to the service.

As for the cryptocurrencies used by Circle, the company might consider switching to another one later on. In a conversation with the NYT, Allaire mentioned that the Ethereum, which is one of the most promising alternative blockchains around, wasn't ready for global use yet, but could be in the future.

"We’re in the early stages of blockchain technology," he added in a blog post. "Bitcoin, Ethereum, private chains, and new distributed ledger protocols will evolve, and a free and open experience with money will emerge."

The FCA declined to comment when Ars quizzed the financial regulatory body about whether it planned to attract more blockchain-using fintech startups in the UK.