Coinbase Expands Bitcoin Services to Canada

     After raising $106.7 million in four rounds of venture capital, Bitcoin service company Coinbase has now been introduced to 27 countries in North America and Europe. After Coinbase made Bitcoin business flourish in Europe in September 2014, countries have introduced Bitcoin services one after another.

     CEO Brian Armstrong has said Coinbase will strive to expand its service to 30 countries by the end of 2015, a goal it set when it announced a $75 million Series C funding round in January.

     As a result of this move, Canadian residents can now trade Bitcoin using Canadian dollars (CAD), deposit CAD funds into Bitcoin wallets, and trade CAD/BTC through Coinbase’s Bitcoin exchange.

     In an interview, Armstrong explained that while the company has so far had a presence in developed countries, it will work hard to expand its services into developing countries.

     However, the regulatory environment he advocates is easier to implement in countries with high English-speaking and technological literacy.

     Armstrong told CoinDesk:

“It’s not about which country we want to do bitcoin business in, it’s about the country we want to do bitcoin business in that can work with us. There’s a large group of people in Canada who are interested in bitcoin, but they can’t trade bitcoin easily and conveniently.”

     The company said its legal counsel felt Coinbase did not need to make any moves in Canada’s regulatory environment, a factor that motivated it to develop brokerage and exchange services in all Canadian provinces.

     Notably, the company’s Canadian CAD/BTC exchange will be kept on a separate order book, meaning that, for now, U.S.-based exchange customers will not be able to access the Canadian exchange through their accounts.

Armstrong went on to say, “There are certainly benefits to having multiple currencies, but we want to be conservative in the legal and regulatory sense.”

     As part of the launch, Coinbase said it will waive retail conversion fees for customers using its brokerage service starting September 6. Trading fees for exchange commodities will remain in place.

A sure win in the Wall Street competition

     Armstrong also commented on the growing competition in the U.S. bitcoin exchange market, with well-funded rivals such as itBit and Gemini emerging .

     Although these exchanges have gained a share of the US market, Armstrong believes that Coinbase still has the most dominant position in the United States.

     In particular, he pointed to investments in the New York Stock Exchange (NYSE) and founder Fred Ehrsam's experience at Goldman Sachs.

     “If Wall Street is going to do anything (with bitcoin), they’re going to do it with us,” he said. “We have a clear winner in this race.”

     Coinbase exchanges are currently open in more than 30 states, as well as Washington, D.C., and Puerto Rico, and have obtained security licenses in some of their jurisdictions.

     Rival itBit received a banking license in New York, which it claims will allow it to open locations in all 50 states.

     While Armstrong speaks positively of competitor itBit, he feels Gemini’s efforts, including its recent application for a banking charter in New York, have been futile.

     He implied that the Winklevoss brothers, the investors and entrepreneurs behind the project, have no proven track record of delivering products.

Business model issues

     As for Coinbase’s long-term revenue model, Armstrong said the launch of the project will most likely add to its exchange’s product offerings, potentially including derivatives.

     Armstrong described the company's brokerage business and professional trading tools as "Google AdWords," a revenue stream that the company will use to pursue more innovative, low-cost, consumer-oriented services.

     However, he admitted that wallets and exchanges across the industry have had a bit of a hard time raising revenue, but he believes Coinbase has the ability to make money through its brokerage service, given that the company has already gained a good reputation as a trustworthy company.

     He added, "This is more like Apple's model than Walmart's. I think the consumer business will be stable and profitable, and it will allow us to provide the platform to developers for free."

     Now, he reiterated that Coinbase is working hard to build an “open, efficient payments network” for its global user base, stressing that its service in Canada would be a big step toward that goal.