By Robb M. Stewart
MELBOURNE, Australia--A venture capital fund backed by one of
Australia's biggest banks has invested in U.S. bitcoin startup
Coinbase Inc., offering the lender a peak at real-time pricing for
cryptocurrencies and the technologies involved.
Coinbase in a brief statement said it planned to work closely
with Reinventure Group, a financial-technology-focused firm that
counts Westpac Banking Corp. as its largest investor, and would
share insights on the use of digital currencies globally.
A spokesman for Reinventure confirmed an undisclosed strategic
investment had been made in Coinbase, which already has backing
from the New York Stock Exchange, banks and venture-capital
firms.
Australia's banks have to date shown only tentative interest in
digital currencies, although the biggest banks have been testing
so-called crypto protocols. Westpac has, directly and through
Reinventure, sought to work more closely with innovative companies
and what are viewed as disruptive technologies. An investment in
the U.S. bitcoin company could offer it greater insight into the
risk profile of such operators and the technology that bitcoin
backers are betting will transform the movement of money.
Bitcoin's penetration in Australia remains limited so far, and
the Australian Crime Commission late last year launch an
investigation into the possible links between digital currencies
such as bitcoin and organized crime. The commission in March said
the currencies were a growing threat in online purchases of illicit
goods and for transfers between criminals.
Bitcoin enthusiasts worldwide were last year knocked by the
collapse of Japan-based exchange Mt. Gox--taking with it about half
a billion dollars of investors' money--and a security breach
earlier this year at Slovenia-based exchange Bitstamp.
Coinbase in January opened the first licensed U.S. bitcoin
exchange which the company said offers greater security for
individuals and institutions to trade and monitor real-time pricing
of the digital currency. The NYSE invested in the startup during a
US$75 million round of fundraising that closed that month. Other
investors included USAA Bank, the venture arm of Spain's Banco
Bilbao Vizcaya Argentaria SA and former Citigroup Inc. Chief
executive Vikram Pandit.
Commonwealth Bank of Australia Ltd., the country's biggest bank
by market value, is about to begin a wider experiment with one of
its offshore subsidiaries on the possible benefits of using
digital-currency payment technology for internal money
transfers.
"The idea is to test in a controlled environment what a
bank-to-bank internal transfer might look like using crypto rather
than existing payment providers," a spokesman said.
Like its peers, Australia & New Zealand Banking Group Ltd.
is keeping a close eye on digital-currency developments and has
been investigating possible uses for the technology with U.S.-based
Ripple Labs, developer of a bitcoin-like technology that enables
institutions to transfer money internationally.
Write to Robb M. Stewart at robb.stewart@wsj.com
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