The co-founder of Coinbase, Fred Ehrsam, says the bitcoin company will encourage local regulators to support the growth of cryptocurrencies as a precursor to potential expansion in Australia, after Westpac Banking Corp's venture capital fund Reinventure Group invested in Coinbase alongside some of the world's leading venture capital firms.

Mr Ehrsam, a former Goldman Sachs currency trader who co-founded Coinbase in mid-2012, described the deal – the first involving an Australian bank and any bitcoin player – as an "information sharing partnership" that would provide Coinbase with an opportunity to educate Austrac and other financial regulators about bitcoin. This is digital money that is not controlled by any bank or government and allows transfers of value to be made to anyone with an internet connection without bank involvement in the process.

Coinbase says it will educate Austrac and other financial regulators about bitcoin. Credit:Reuters

Coinbase provides a range of services to the bitcoin economy. These include storing bitcoin in a digital wallet, allowing customers to exchange domestic currencies in and out of bitcoin, and providing merchant services to process transactions for companies dealing in bitcoin. It also operates an exchange where speculators can bet on direction of price of bitcoin, and various anti-money laundering and security services.

Australian users can currently use the Coinbase wallet but the company does not transfer Australian dollars, which would require a relationship with a local bank and approval by regulators.