TORONTO — A Canadian bitcoin exchange will be acquired by a San Francisco-based exchange, a move that signals consolidation may be afoot in the so-called cryptocurrency world.
Bitcoin exchanges are described as the on-ramps and off-ramps of the bitcoin world, allowing users to trade their cash for the digital currency, or vice versa.
Cavirtex, a Canadian exchange, was originally launched in 2011. In April 2015 it was acquired by Coinsetter, a New York-based exchange that targets Wall Street traders.
Following the deal, both exchanges continued to operate as separate entities.
Kraken, a global bitcoin exchange headquartered in San Francisco, says it will acquire both Cavirtex and Coinsetter for an undisclosed amount, and will consolidate the two exchanges under its own brand. Client accounts will be transferred to the new platform on Jan. 26.
Bitcoin is a virtual currency that is not controlled by an authority such as a central bank, and is exchanged through peer-to-peer computer networks.
Kyle Kemper, senior vice-president of global business development at Coinsetter, says the deal will provide Canadians using the Cavirtex exchange with more liquidity and the ability to swap their bitcoins for a broader array of foreign currencies.
"Before with Cavirtex you were only able to trade the Bitcoin-Canadian dollar pair," says Kemper.
"Now Canadians will also be able to trade Bitcoin-U.S. dollar, Bitcoin-euro, Bitcoin-Great British pound, Bitcoin-Japanese yen."
Kemper says the dramatic spike in the value of bitcoin in 2013 — which skyrocketed to more than US$1,000 before subsequently falling lower — caused a slew of new exchanges to open up shop.
Now the exchanges are beginning to consolidate, a sign that Kemper says indicates the cryptocurrency industry is starting to mature.
"The industry is definitely maturing," said Kemper. "The central banks are talking about it. The regular banks are talking about. The technology behind it is getting all sorts of play."
The deal will also see Kraken launch an advertising campaign for Bitcoin in Toronto, encouraging Canadians to purchase the cryptocurrency.
"We've been servicing the bitcoin community, but now it's about reaching out to the larger community as well," said Kemper.
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Alexandra Posadzki, The Canadian Press