Kraken has partnered with Luxembourg-based payment solution specialist PayCash to add GBP trading and reinstate USD deposits to its bitcoin exchange platform.

The news comes amid an uptick in activity from the San Francisco-based startup, which announced it would begin operating in Japan by the end of October. Kraken further confirmed that clients in 28 EU member states will now have access to USD and GBP deposits, developments it characterized as being in line with its goal of becoming a leading global bitcoin exchange.

The company framed the partnership as one that would help it reinstate a more robust exchange service, while appealing to new partners such as banks, hedge funds and institutional investors in Europe. Notably, Kraken has been operating without full US dollar withdrawals and deposits since February, when it parted ways with its former US banking partner.

Kraken CEO Jesse Powell said:

“Our clients have asked about this since we stopped servicing USD, and we are proud to say we are making good on an old promise.”

Marcus Becker, chief marketing officer at PayCash, told CoinDesk that the move is also indicative of how his company is looking to capitalize on its position to form new partnerships in the bitcoin space.

“We offer payment as a service, meaning companies that don’t have their own money license, we enable them to offer e-money services,” Becker said. “[We’re seeking] to enable players in the wider area of cryptocurrencies to be connected to the old or the existing payment world.”

The announcement marks the second notable partnership for Kraken in the European market, following the news it had aligned with Germany’s Fidor Bank in October 2013.

US market takes backseat

Speaking in an interview, Powell said that Kraken is currently able to offer crypto-to-crypto trading to its US clients, and that USD deposits are available in select states. However, he affirmed that the market remains a low priority for Kraken, even though it bases its operations in the US.

Powell cited the relative ease of working within European regulations as one reason for this strategy, but also spoke out against what he considered to be a worsening environment for US bitcoin startups.

“I still see it as a compliance quagmire,” Powell said. “It’s extremely difficult to operate legally in the US, and even if you had your licenses to operate, you’d still need to solve the problem of giving yourself a bank account.”

While he expressed a long-term desire to serve consumers in the US, Powell said that for now, Kraken’s focus will be on localizing its website in Europe and adding new, country-specific payment methods in the region.

Search for a partner over

The deal also marks the end of a much longer search for a partner for Kraken, and as such, Powell expressed enthusiasm about the agreement with PayCash.

“We have spent eight months looking for a strong partner, one with compliance capabilities, regulatory oversight, payments expertise and a technology focus,” Powell said, in a nod to the company’s past negative experiences.

Becker also indicated that is comfortable working with bitcoin clients, given what it characterized as its favorable environment for industry businesses.

“The space is just evolving, we feel quite comfortable,” he said.

Earlier this year, Luxembourg opened a public dialogue with bitcoin businesses, a development that led it to emerge as a potential destination for companies in the industry. PayCash currently offers point-of-sale (POS), online and peer-to-peer (p2p) payment solutions, as well as e-money services for partners.

New trading options

Although Kraken has long made USD/BTC trading available to its customers, volume levels were impacted by the lack of options for new dollars to be brought into the exchange.

However, Kraken’s entrance to the European market may be more notable given the relatively limited number of GBP options available to local consumers. Kraken will compete in a market that includes Coinfloor, which launched its order-book exchange in March and recently added support for US dollar, euro and Polish zloty deposits.

Powell said he expects Kraken to appeal to the UK market as he believes his exchange can provide a compelling cost savings.

“As far as I know, we’re the only native pound bearer, where you deposit pounds and hold in pounds, and it’s not converted into another currency, so it’s probably going to be a cheaper option for most people,” he added.

Data from Coinometrics indicates that Kraken’s BTC/EUR trading accounts for 99.32% of its total trading volumes, while figures for BitcoinCharts suggest Kraken is the current market leader in BTC/EUR trading.

Images via Kraken; Shutterstock