Bittrex Inc., a Seattle-based cryptocurrency exchange that lets users swap nearly 200 different digital coins, said it forged banking agreements that will allow some customers to trade in U.S. dollars.
The closely held firm said the pact will let corporate clients in some states buy virtual tokens using dollars — a move that could help the trading venue bring in more users. Bittrex is working with New York-based Signature Bank, which will hold the dollar-denominated funds, along with other financial firms.
“It’s been a long path,” Bittrex Chief Executive Officer Bill Shihara said in an interview. “It’s not just about banks being able to trust Bittrex. It’s about banks being able to trust crypto in general. And I think it’s really showing that crypto is turning the corner in terms of mainstream acceptance.”
Larger financial institutions, bound to strict government regulations on money laundering and customer verification, have mostly avoided putting their reputations at risk by getting involved with an industry that many still associate with criminal activity. As a result, some virtual-currency marketplaces are “crypto-to-crypto” only, meaning that they allow customers to trade using digital money, not dollars.
Some banks are coming around. Coinbase, one of the biggest U.S. crypto trading venues, has developed relationships with Cross River Bank, Metropolitan Bank and Silvergate Bank in the U.S., and recently secured a Barclays PLC bank account in the U.K. Noble Bank International, based in San Juan, Puerto Rico, took over banking duties for Bitfinex last year after the exchange was dumped by Wells Fargo & Co., three people familiar with the matter said earlier this month.
“They really do look and pore through the entire business,” Shihara said. “They want to make sure that we’ve got robust AML/KYC processes, that we’ve got the right controls on our finances. They do background checks and everything. They really look at our business soup to nuts.”
Bittrex, which has more than 3 million customers globally, is launching fiat trading on Thursday for Bitcoin, Tether and TrueUSD. The service will initially be available only to corporate customers in Washington, California, New York and Montana for regulatory reasons, but the firm said it plans to expand the offering to retail investors eventually.