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New Bitcoin exchange launches in the UK

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Internet Security Threat Report 2014

A new online trading platform based in London is to open next week to those seeking to exchange British pounds for the virtual currency Bitcoin.

Traders are now able to register with Coinfloor providing they come from the UK or Europe, although they will not be able to buy or sell currency on the platform until 5 November, according to a report by FT.

The trading of Bitcoin is not regulated within the UK. It is, however, regulated in the US, and hence the platform will not be open to US-based trades.

However, Coinfloor has said that it conducts anti-money laundering and other security checks on registrants and that its manual system for exchanging currency helps protect customers against risks posed by cyber attacks or physical theft.

"Coinfloor has chosen to operate under a 100% cold storage policy," the company said on its website. "What this means is that all Bitcoin are stored offline in secure storage systems. What this means is that Coinfloor stores the encrypted private keys split between several USB devices and held in different safe deposit boxes in different locations."

"A few times per day, an undisclosed (more than 1) number of Coinfloor agents go to multiple underground vaults in separate locations held with separate companies to visit the USBs containing encrypted private keys. In the heart of the deposit chamber the agent signs user's withdrawal transactions on an offline computer and then once the agent is above ground, the agent takes the signed transactions to an online computer and uploads them to the Bitcoin network. We believe this protects us from all methods of online attack and prevents against physical (rubberhose) attack, as the private keys are never together in one place or accessible by one person," it said.

Coinfloor added that its security policy complies with the ISO27001 data security standard.

In a separate development the world's first machines through which users can deposit physical cash for Bitcoin are to be installed in a coffee house in Vancouver, Canada, according to a report by Finextra.

The machines will allow individuals to deposit up to $3,000 Canadian dollars (£1,789) a day, with a palm-scanner helping to differentiate users from one another, according to the report.

Copyright © 2013, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

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