Tradehill Bitcoin Accounts Moving to Credit Union – Bloomberg

Tradehill Inc., an exchange for
virtual currencies such as Bitcoin, is moving customer accounts
to a U.S. credit union, a shift designed to make it easier for
clients to complete transactions.

Holdings with Tradehill will be transitioned to federally-insured accounts at the Internet Archive Federal Credit Union,
according to an e-mail to clients that was obtained by Bloomberg
News. Tradehill is moving accounts to the credit union to win
more business from investors and financial institutions that
trade in Bitcoins, according to a person familiar with the
matter who asked not to be named because the plans aren’t
public.

Created four years ago by a person or group using the name
Satoshi Nakamoto, Bitcoin is a virtual currency that can be used
to buy and sell a broad range of items — from cupcakes to
electronics to illegal narcotics. The surge in a Bitcoin’s value
has made millionaires out of people who loaded up on them early
on — however briefly. Many of them are self-described
libertarians, drawn by the idea of a currency that exists
outside the control of governments.

Tradehill, based in San Francisco, is among several upstart
exchanges including Mt. Gox and and BTC-e that have cropped up
to support Bitcoin trading. Tradehill’s client deposits will be
insured for up to $250,000, according to the e-mail to
customers.

Customers must provide government-issued photo
identification and a social-security number to transition their
Tradehill account to the credit union, according to the e-mail.
Accounts are being frozen today, and clients who don’t want to
switch to the credit union have the option to liquidate their
holdings, according to the e-mail.

The New Brunswick, New Jersey-based credit union is chaired
by Brewster Kahle, founder of the Internet Archive, one of
world’s largest online digital libraries. In an April blog,
Kahle said that the Internet Archive began receiving donations
of Bitcoins in 2011, and that he thinks of it “as the local
currency of the Internet.” The Internet Archive set up a
Bitcoin ATM, and even paid some employees in Bitcoin, he said.

Kahle and Robin Kunimune, a spokeswoman for Tradehill,
didn’t return requests for comment.

Bitcoin is similar to the U.S. dollar, the euro or the
Mexican peso — except that it isn’t controlled by any country.
While it’s generally not used for transactions that require
real-world currency, a handful of technology companies —
notably blogging-tool maker WordPress — are starting to accept
payments in Bitcoin.

Transactions done with Bitcoin aren’t easily traceable.
However, Tradehill’s association with the credit union may make
it easier to identify Bitcoin users who could previously use the
exchange without providing identification.

To contact the reporter on this story:
Olga Kharif in Portland at
okharif@bloomberg.net

To contact the editor responsible for this story:
Pui-Wing Tam at
ptam13@bloomberg.net

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