Published on July 11, 2014 at 12:11 BST
A new exchange and wallet service based in Australia and Hong Kong says it is building ‘bank-level’ services around bitcoin, designed to appeal to both serious traders and everyday travelers.
CoinJelly will launch two exchanges for high-volume traders, initially for the Southern Hemisphere and then soon after, the Northern. Notably, its consumer wallet option features an ATM/debit card network for use worldwide.
In perhaps its most novel approach, though, the company claims it has insured its bitcoin ecosystem against loss for up to AUD$20m ($18.7m), or 20 BTC per customer.
Accounts will be open to customers in 160 countries and balances available in nine major world currencies, including Russian rubles and Chinese yuan.
Building trust
CEO and founder Ashley King said security, compliance and transparency were CoinJelly’s biggest issues, in order to build trust with those yet to adopt bitcoin who might have been put off by high-profile failures in the past.The firm follows other exchange launches in the region with a new focus on professionalism and financial services aimed at serious investors.
CoinJelly’s wallet is now launched and live, and its exchange has been under development for 4-5 months. According to King, there have been no security breaches or attempted intrusions as yet.
King said:
“We’ve implemented a number of bank-level passive and active safety measures including strong encryption, offline back up and two-factor authentication, leaving customers’ wallets far less vulnerable to attack.”CoinJelly’s insured wallet also offers an intrusion alarm system, which identifies possible malicious activity and reacts automatically to head off fraud and attack.
ATM/debit cards
CoinJelly will also be providing ATM/debit cards for customers to easily cash out their bitcoins, and is in the process of finalizing merchant accounts.The cards are aimed primarily at travelers as an affordable and easy way to transfer funds into local currency worldwide.
If the ATM/debit card plan sounds familiar, it’s because CoinJelly purchased some of the related merchant connection code from defunct Cypriot ‘bitcoin bank’ and debit card network Neo & Bee.
This will enable customers to purchase cards from CoinJelly’s site, load the cards with bitcoins (thus effectively selling them to CoinJelly) and then spending the fiat amounts on the cards like any other bank debit card.
The cards may also be used to withdraw cash at over two million ATMs worldwide.
A limited-edition black-colored card will be available to the first 500 customers and will also offer discounted rates for life.
Insurance and security
CoinJelly approached an insurance company about wallet guarantees, but it was only after company representatives were provided a copy of the software to experiment with that they were able to make an agreement.Security is handled through in-browser encryption of private keys, and the company does not have any access to bitcoin balances.
Customers may also schedule a personal visit to CoinJelly’s head office in Brisbane for an extra layer of assurance.
International focus
CoinJelly’s development team is divided between Australia, Switzerland and Sweden.To build liquidity around launch time, King and his team have spent most of the past six weeks traveling the world talking to traders to find out what they want, particularly fee structures and special promotions such as fee-free days.
They have signed up about 15 large North American traders already, including some that King describes as high-profile names, and he said the company now has enough volume to trade about 1,500 BTC daily.
Non-traditional markets
CoinJelly will be accepting accounts from Russia and even mainland China, where users can fund accounts through CoinJelly’s bank in Hong Kong.“Until instructed otherwise we’ll continue to do so. Obviously we don’t want to step on anyone’s toes, If we’re told to stop doing it, we’ll stop doing it.”Coinjelly’s financial operations are currently being managed from Hong Kong, intended as a temporary solution until regulation and compliance issues are resolved in other nations like Australia.
“We’re going to have a nice little ecosystem, we’re going to have a really good wallet and a great exchange, initially tiered towards high-volume guys, but once we open the Northern Hemisphere exchange the bigger guys will probably switch to that.”
Sole investor
Aside from the money used for initial funding, CoinJelly is financed solely by investor Peter Anderson, who made his fortune in the early days of the Internet economy.He said he was drawn to bitcoin more for its disruptive potential than any desire to speculate on its value and that CoinJelly was the first project he thought worthy of such investment:
“[Ashley King's] solution was the first one I’d come across that fit my ethical standards as well as the overall approach to the community – customers rather than users. He has a really grown-up approach. Which is something that’s missing in other offerings.”Banks, he said, had grown lazy due to being the default means for moving money around the world, rather than offering any real value. This was especially true of the forex market, he indicated.
“Crypto coins will blow a hole in that laziness. They’re going to have to compete. There’s long-term value for consumers here who are happy to look a bit deeper.”While compliance issues would likely raise the cost of doing business in the bitcoin space, Anderson said, it wouldn’t be as high as banks often claimed.
“Cost of compliance is a tremendous excuse for banks and other institutions to jack up fees,” he said, adding:
“Trouble is, they jack those fees way past the [true cost] of providing that compliance. And given my career has been in and around that area, it has always annoyed me.”Disclaimer: This article is not an endorsement of the company or companies mentioned. Please carry out your own thorough research before investing any funds.
Card image courtesy CoinJelly
Correction: A previous version of this article stated that CoinJelly had been cooperating with the Swiss Zurich Insurance Group to insure its ecosystem against loss. Zurich has since been in contact with CoinDesk to clarify that: “A CoinJelly press release stating that Zurich Financial Services in Australia is insuring CoinJelly products is erroneous. Our authorised general insurer in Australia, Zurich Australian Insurance Limited (ABN 13 000 296 640) has not issued any policy of insurance to CoinJelly. [...] We do not know who (if anyone) is providing insurance to CoinJelly in Australia.”
The previous version also stated that CoinJelly is voluntarily submitting itself to a vetting process by the Bitcoin Association of Australia (BAA). The BAA has also denied any involvement, and says it does not have such a vetting process.
