London-based start up, Coinfloor, is launching a new market place for bitcoin focused on institutional investors, as the interest of hedge funds and investment banks in the digital currency grows. The company Coinfloor that was founded a year ago in London, is setting up an over the counter bitcoin market.
Mark Lamb, Coinfloor’s chief executive, said: “We’re seeing a lot of demand… Most of the Bitcoin liquidity is happening off books – it’s a similar problem to the equities market, where you see a lot of these orders happening on dark pools.”
It will cooperate with a trading firm that is under the regulation of the Financial Conduct Authority to guarantee financial institutions can handle bulk orders for the bitcoin. The silent partner will have responsibilities of a “market maker”, that include buying and holding bitcoin to ensure it is easily available when investors need it.
Tom Robinson, a director of the industry group U.K. Digital Currency Association, said: “We are seeing growing interest from institutions, especially hedge funds. We’ve had interest from some investment banks in Europe as well.”
Some US-based institutions have already made bets on Bitcoin: the first Wall Street company, that announced its investment in bitcoin was Fortress Investment Group. Earlier this year it bought $20 million of the virtual money and has invested $10 million in Bitstamp exchange.
Mr. Robinson’s bitcoin storage service, Elliptic, also manages digital currency security. Furthermore, Elliptic handles bitcoins forUS-based Falcon Global Capital, the world’s first Bitcoin investment fund that was launched earlier this year.
Coinfloor, Bitstamp and Elliptic are UK-based start-ups that help London to join emerging Bitcoin industry, spurred by the collapse of Mt. Gox earlier this year. The companies bringing positive atmosphere after several failures in the bitcoin industry like the collapse of Japan-based bitcoin exchange Mt. Gox. Mark Lamb says that:
“The bankruptcy of Mt. Gox was an event that is often seen by the public and investors as a pretty negative event for Bitcoin; but for most entrepreneurs, we’re seeing it as an incredible opportunity in the space.”
Regardless of the recent failures in bitcoin industry and the decrease of bitcoin’s value, lots of startups are focusing on digital currency and are aiming to keep bitcoin relevant.
Bitcoin would have disappeared a long time ago if only new companies had given up on it after all the bad news and rumors that had been surrounding bitcoin. With more investments being devoted to bitcoin, it still has an exceptionally good fighting chance of overcoming its previous decline.