New Bitcoin exchange launches in Sydney

 

The hype around digital currency Bitcoins continues to defy the expectations of investment professionals as another Australian-based exchange opens today, promising to give investors faster trading access than ever before.

Bitcoin company, Independent Reserve, has launched the country’s newest exchange, based in Sydney. It is understood there are now two in Australia.

Unlike the two main Australian-based stock exchanges, Independent Reserve is not regulated by the Australian Securities and Investments Commission, which means the company has had to take investor protection into their own hands.

“Price Waterhouse Coppers are auditing all of our finances,” said the company’s chief executive Adam Tepper.

“We are trying to mitigate risks to ensure people think their money is safe and secure. We have done everything we could possibly do to minimise risk to our clients,” he said.

The Australian Taxation Office ruled in August that Bitcoin, which trades uses mathematical code, is a commodity, not a currency and people who transact using Bitcoins will have to pay goods-and-services tax on the Australian dollar value of the transaction.

Independent Reserve said it will not charge GST on the funds sold through its exchange.

Wild fluctuations in the price of a Bitcoin – which is currently trading at $US380 and was once as high as $US1000 – as well as heightened level of risk and lack of formal regulation are often cited by professional investors as the reasons why they will not invest in the digital currency.

Among the skeptics on Bitcoin include legendary investor Warren Buffett and Peter Schiff, who have questioned its value. Mr Schiff however recently announced that he would partner bitcoin payment processor BitPay to allow investors to buy and sell gold and silver.

Attitudes do appear to be changing and more and more entrepreneurs like Mr Tepper are eager to find new ways of tapping into demand for Bitcoins and the opportunities attached.

“Other exchanges I have looked at have taken two or three months to create an account, but more stereotypical is one week. I think that is a long time so I think what people will notice when they use Independent Reserve is that they can be up and trading in a matter of a few minutes, which is great,” he said.

Melbourne-based Bitcoin Group is hoping to be the first Bitcoin company to list on the Australian Securities Exchange in November.

It comes as a Senate inquiry into the regulation of Bitcoin chaired by senator Sam Dastyari opens for submissions to develop a regulatory framework around the cryptocurrency.

“In Australia, Bitcoin is classified as a digital asset. I think we will probably see a change in the attitude towards Bitcoin. I think after this Senate inquiry I think we should probably see more in the Bitcoin space,” said Mr Tepper.

This week, London-based Bitcoin company Coinfloor and also the biggest Bitcoin-to-sterling exchange in terms of volume of currency traded, will launch a wider range of currencies, according to the Financial Times.

It will also raise money from its investors to launch a bitcoin fund next month, taking the company’s value up to £8million.

In Japan, Bitcoin exchange Kraken will start operating by the end of this month, and will become the latest crypto-currency service to launch in the country since the collapse of Mt. Gox – which was previously one of the world’s biggest crypto-currency market places.

Mt. Gox went bust at the start of this year and lost half a billion dollars’ worth of bitcoin belonging to 120,000 creditors.

Technology giants like Apple have been increasingly looking at Bitcoin as an alternative payments system.

Independent Reserve said that its servers are securely located at two Tier 3 data centres in Sydney, allowing for synchronous replication of all data across both locations in real-time to ensure zero data loss.

The exchange will charge a flat fee of 0.5 per cent on all trades, however Mr Tepper said the company is open to negotiation with market makers and heavy volume traders.