Seeking to Solve Bitcoin's Banking Dilemma

When Fidor Bank's Michael Maier spoke to CoinDesk in June, the Internet bank COO framed his industry as one that bitcoin would grow to challenge directly, suggesting at the time that its partnership with Kraken demonstrated its intent to accept this future and even cooperate with it.
However passive these statements may have seemed at the time, they came into sharper focus on 31st October, when Fidor announced it would team with its San Francisco-based bitcoin exchange partner to launch "the world's first cryptocurrency bank".
The unnamed project seeks to build a regulated financial institution that would help bitcoin startups that have struggled to secure and maintain accounts even for day-to-day business.
Given this backdrop, Kraken CEO Jesse Powell sees his company's most prominent collaboration with Fidor as more than an exercise in bringing another first to the ecosystem. In a new interview, Powell positioned the specialized bank for cryptocurrencies as a necessity should the ecosystem succeed at delivering on bitcoin's full technological potential.
Powell said:

"For Kraken to be a viable business long term, for most players to be viable, we need to see the pie grow. That’s what we want to do with Fidor, is create a bank with the specific mandate to bank bitcoin companies and provide reliable banking to end-users of bitcoin."

By providing stable banking partnerships to companies in the ecosystem, Powell aims to, in turn, return lost time and energy to the community. In the process, he will also expand his business beyond one that targets market makers and bitcoin companies with a VC-backed order-book exchange.
However, Powell contends that Kraken has the experience it will take to rise to the challenge and deliver on its goal.
"We’ve talked to more than 200 banks in the last year-and-a-half about banking bitcoin companies, and the successes are the ones you’ve seen so far, the 1% success rate," he said. "[The bitcoin community] can’t go on wasting time. How many man hours is the industry wasting talking to banks? It’s just insanity."

A 'bitcoinized' financial institution

Though Powell was clear on the goals the project is set out to achieve, his statements suggest that Fidor and Kraken are far from solidifying any concrete plans on the types of services they will provide. As the original release relayed, even the name of the bank – BICONDO, BYSE Bank or Cryptocurrency Bank – remains a matter of debate.
However, Powell indicated that the bank does intend to offer certain services to clients, like the ability to borrow against bitcoin assets and invest in lending products.
"We hope to leverage blockchain technology to offer some additional services and 'bitcoinized' traditional financial services," Powell added.

Read more:
http://www.coindesk.com/kraken-seeking-solve-bitcoins-banking-dilemma/

Compared to Japan, the United States is in the Dark Ages

Professional trading platform Kraken has announced it will open up operations in Japan sometime next month.
After Mt. Gox was shattered by a US$470 million heist, a vacuum was created in the Japanese Bitcoin market. One of Mt. Gox’s insiders, Jesse Powell, tried to help and restore the flailing giant after a hacking attack back in 2011. That is when he decided to found a competitor – Kraken.
In result of Mt. Gox’s collapse, the newly founded Kraken soon found itself as one of the top Bitcoin exchanges with its base surging 50 percent in two months. “The company accounts for about half of the virtual currency’s daily euro trading,” says Powell.
Kraken was also part of CoinTelegraph’s online exchange reviews, which you can read here.

Long way to Japan

Jesse Powell has over a decade long experience in the industry. His company Lewt, an equivalent of Amazon.com for virtual potions, runes etc, prospered even after the so-called real money trading and sale of in-games items were banned by many companies responsible for running big online multiplayer games.
“The whole game currency space was very interesting to me, which is how I was able to notice bitcoin,” Powell said. “It has all the benefits of these gaming currencies without that centralized point of weakness. I think it’s really the future.”
The United States’ law made it difficult for Kraken to launch and then to get custodial bank accounts to hold customer funds. Because of the guidance on virtual currencies issued by the Financial Crimes Enforcement Network, the launch of Kraken’s services was delayed for half a year. According to US law, the company had to limit their US services to only five states, so Powell decided to look for another market to introduce Kraken.
That is why he got accustomed with a Japanese law making his company one of the founding members of the Japan Authority of Digital Asset along with CoinPass and BitFlyer. Kraken’s founder observed that a lot of difficulties with opening new markets for Bitcoin businesses are a result of regulatory hurdles and uncertainty. After the struggle with the American law, Powell admitted:

“I was really surprised how open-minded Japanese politicians are. Compared to Japan, the United States is in the Dark Ages.”

Turning points

The partnership with Germany’s Fidor Bank AG (F5R) was one of the company’s breakthroughs. Powell comments on this fact:

“Euro trading of virtual currencies, including bitcoin, litecoin and dogecoin, accounts for about 95 percent of the company’s volume. The exchange also allows deposits and withdrawals in South Korean won.”

Powell also admits that the launch into a new region depends on finding a bank partner in this region as it requires not only a lot of hard work, but also involves a great sum of financial resources. Kraken acquired its own bank partner in Japan, whose name remains unknown, and is now ready to open up the service to Japanese traders.

Read more at:
http://cointelegraph.com/news/112310/kraken-sets-sight-on-japan-company-ceo-compared-to-japan-the-united-states-is-in-the-dark-ages