The startup CoinLab is teaming up with the world's largest Bitcoin exchange Mt. Gox and the global bank Silicon Valley Bank to provide purchase, sale and exchange services to customers in the United States and Canada beginning March 31.
Difficulties of North America users
"There are two major difficulties Bitcoin exchange customers have traditionally faced: banking troubles for the underlying exchange, and security of their coins," said CoinLab CEO Peter Vessenes, in an announcement post.
North America users are especially vulnerable to these two risks, according to Vessenes, due to the lack of reliable Bitcoin exchange services based in the region, which compelled CoinLab to strike the landmark deal.
The startup will expand the presence of Mt. Gox, a Japan-based Bitcoin exchange and the largest of its kind globally, in North America. Silicon Valley Bank will be holding deposits of Bitcoin and dollars for CoinLab, according to this Forbes report of the deal, but without providing insurance for the deposits.
"For US customers, working with Mt. Gox can be difficult at times. They are in a different time zone, moving money to them is a real challenge, and often people worry about delays and availability receiving withdrawals -- all things which hurt the Bitcoin landscape as a whole.
"We wanted to match up US-quality customer service with Mt. Gox' proven record; this is how we're going at it. We'll be working with Silicon Valley Bank, the most innovative bank in the US. We'll be using an in-house key generation process for Bitcoins, combined with real (and realistic) physical controls for Bitcoins and cash. We'll be providing ongoing finance information for our customers so they are sure their funds (BTC and USD) are safe," said CoinLab.
"The move will allow North America-based Mt. Gox users to directly convert money from dollars to Bitcoin, without having to pay the hefty transaction fees associated with transferring money abroad," said Forbes.com's Saranya Kapur.
CoinLab seemed to have chosen its two partners strategically for maximum market coverage, corporate synergy and user security.
The Japan-based Mt. Gox is the world's largest exchange for Bitcoin with a relatively sterling reputation among the available exchanges in the market. "It seemed clear that Mt. Gox had by far the best security record in the Bitcoin exchange landscape," said CoinLab's Vessenes, notably shrugging off the high-profile breach Mt. Gox suffered in mid-2011.
Meanwhile, Silicon Valley Bank has over $20 billion in assets and is the largest lender to Venture Capital firms, servicing 50% of venture capital-back tech and life science companies in the US and 80% of the Wall Street Journal's Top VC-backed companies in 2012, according to this Silicon Valley Bank infographic.
Three transition stages
CoinLab said there will be three transition stages in March that will facilitate the
The Alpha transition will occur in the first half of March when around 100 selected participants will stress-test the new system, ensure it is working as intended and zap last-minute bugs. Alpha participants can apply via the CoinLab website.
By March 15, CoinLab will move into the Beta transition and expand the stress-test user base to 5,000.
Then by March 22, CoinLab is slated to have the full service running for all North America users.
Improved convenience and service
CoinLab said that Mt. Gox customers based in the US and Canada will not be required to join the stress-test stages and can just wait for the full transition to occur. Users will be notified when funds have moved over to the US, after which "sending and receiving money in and out of the exchange will get a lot easier.
CoinLab's Vessenes also promised upgrades to the customer experience, but did not provide details, only that "these changes will roll out after we launch."
Startup Makes Bitcoin Purchases Easier in North America This March
By Michael Oliver, Mar 06, 2013