A website that trades in a type of virtual currency called Bitcoin has been given the right to operate as a bank in France.
Bitcoin-Central – one of many exchanges that allow users to swap digital cash — got the green light on Thursday to partner with French bank bank Crédit Mutuel and payment service company Aqoba.
That means it joins the likes of PayPal in becoming a registered payment services provider (PSP). The new bank has an international bank ID, will be able to issue debit cards and transfer money from traditional banks to its customers' Bitcoin accounts and vice versa.
Bitcoin-Central account holders can have salaries and other automatic payments converted directly into Bitcoin and deposited into their accounts. They can also hold separate accounts in euros, and these would be the only funds to be protected by deposit insurance in the event the bank goes into bankrupt.
Digital system a good way to hide cash
Since the launch of the first Bitcoins in 2009, about 10.5 million of them have been traded. One Bitcoin is worth about $13.
The virtual currency has had its detractors. Because of the anonymity it provides, it has been used for illegal activity such as money laundering and tax evasion. In 2011, several U.S. senators called for an investigation into the criminal uses of digital currency.
The chair of the nonprofit Bitcoin Foundation, Peter Vessenes, has admitted that while there is "a lot of love" for the digital currency, "there are … hackers and Ponzi-scheme runners floating around our space."
Vessenes told the Telegraph newspaper Bitcoin exchanges have been hampered mostly by an "undeserved reputation stirred by ignorance and inaccurate reporting."
Bitcoins are the most widely used alternative currency. They are managed and exchanged through different websites and software that use peer-to-peer networks to enable the transfer of digital funds and employ cryptography to prevent users from double spending, counterfeiting or stealing Bitcoins.