Luxembourg has granted a license to bitcoin exchange Bitstamp making it Europe's first fully regulated payment institution for the cryptocurrency with expectations high that an extra layer of legitimacy could lead more people to trade bitcoin. Bitstamp received the license, which goes into effect on July 1st, as part of a two-year application process that tested its security and customer protection systems. "We have put a lot of time and resources into the regulatory process with the goal of ensuring customers feel more confident in using Bitstamp's exchange and products across the European Union," said Nejc Kodric, co-founder and CEO of Bitstamp, in a press release. "We are proud to have taken this important step for our customers and the digital currency/blockchain industry globally."

Bitcoin with QR code Benoit Tessier | Reuters

The decision may go some way to make a bitcoin exchange safer and more secure. According to Vijay Michalik, research analyst for consultancy firm Frost & Sullivan, bitcoin exchanges had been fraught with danger. "There have been lots of people trying to start exchanges and sometimes getting a serious amount of volume before people realise that, while they had that beautiful front end, they didn't have the background security that people really should expect from a financial institution," he told CNBC during a phone interview. "What [the Bitstamp decision] signals is that this is an exchange, at least within Europe, that has been inspected by the regulator and actually meets some of those requirements." Michalik also thought the decision would encourage some new customers to buy and trade bitcoin.

