Bitcoin companies are attracting interest from all aspects of life, including the financial sector it is trying to disrupt. Rather than fighting the winds of change, financial institutions are slowly warming up to the idea of using blockchain technology for their own business model. As a result, Bitcoin companies will sometimes receive an investment from unlikely partners.
Westpac Banking Corp and Coinbase
It is no secret that most major banks want absolutely nothing to do with Bitcoin companies, especially if that company is a digital currency exchange platform. Every incoming and outgoing transaction needs to be manually verified for any money laundering risks, and exchanges create a lot of small transactions.
As every transaction is reviewed, this costs the bank a lot of money, as they will need to increase their staff to account for the increased volume. From that point of view, you can understand why most banks want nothing to do with such businesses, simply due to the additional overhead costs.
But in more recent times, traditional financial institutions have started to see the light and grown fond of blockchain technology. Not necessarily for its public ledger aspect, but because the blockchain allows the transfer of money on a global scale without relying on external partners. In turn, this speeds up the process for both the bank and the customer.
That being said, Australian bank Westpac Banking Corp has invested in popular Bitcoin exchange platform Coinbase, through its venture capital fund Reinventure Group. It is the first time an Australian bank and a Bitcoin company have come to terms on a deal, even though the actual investment took place a few months ago.
It is not uncommon in the Bitcoin world to keep the partners in a round of fundraising, private for a while. Coinbase recently raised US$75m in their latest round, which included a nod of approval from the New York Stock Exchange, former Citigroup CEO Vikram Pandit, and apparently, Reinventure Group.
Reinventure Group Joins Series “C” Funding
The latest round of Coinbase funding was not the company’s first, as they have secured quite a lot of investment funds in the recent year and a half. However, with banks slowly warming up to blockchain technology, it only makes sense that one of Australia’s major banks puts their money where their mouth is.
It is interesting to note that, even though the name of Westpac has now been officially mentioned in the press, the amount invested remains undisclosed for the time being. We do know that all investors pledged a minimum amount of US$1m, and the highest amount is US$10m.
Source: Australian Financial Review
Images courtesy of Westpac Banking Corp and Coinbase