First U.S. bitcoin exchange opens for business

Kaja Whitehouse | USA TODAY

NEW YORK — A Wall Street-backed bitcoin company launched the first U.S.-based bitcoin exchange on Monday in a bid to give the cybercurrency greater legitimacy and attract more mainstream users.

The exchange opened for business promptly at 9 a.m. Monday on exchange.coinbase.com, which advertised itself as a "safe and secure bitcoin exchange."

The new exchange is "insured against employee theft and hacking," said Coinbase, a San Francisco start-up.

Bitcoin security has become an issue amid growing fears of breaches and theft among existing exchanges, many of which are located overseas.

Earlier this month, Slovenian exchange Bitstamp said some 19,000 bitcoins, worth about $5.4 million, had been lost to a security breach.

But bitcoin fans have been skittish since the world's largest bitcoin exchange, Mt. Gox, collapsed last year. The Japan-based exchange has since been accused of mishandling customers' accounts, leading to investigations in both Japan and the USA.

Some U.S. regulators have been working on greater oversight of the cyber coins amid increased interest in them by mainstream vendors, including Microsoft and eBay's PayPal.

Head of New York State Department of Financial Services, Ben Lawsky, for example, has been hammering out plans for a BitLicense for firms that want to deal bitcoins in the Empire State.

Lawsky's regulations are expected to act as a template for other states, which could lead to bitcoin usage among large financial institutions, like banks.

Indeed, Coinbase last week announced $75 million financing in a round that included the New York Stock Exchange and former Citigroup CEO Vikram Pandit.

Coinbase's exchange comes on the heels of similar plans announced by Cameron and Tyler Winklevoss of Facebook fame. Last week, the twins announced plans for their U.S.-based bitcoin exchange, Gemini, which would partner with a New York State-chartered bank and therefore be eligible for FDIC insurance.

"Your U.S. dollars on Gemini will be as safe and secure as they are in your bank account today," they said of their exchange, which hasn't yet launched.