January 12, 2015 / 8:49 PM / 3 years ago

Bitcoin storage firm secures 'Big Four' financial accreditation

LONDON (Reuters) - Elliptic, a firm that stores bitcoins for financial services clients, said it had received an accreditation from a “Big Four” accounting firm that signified it operates on the same standards as a custodian bank.

A Bitcoin (virtual currency) paper wallet with QR codes and coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014. REUTERS/Benoit Tessier

Elliptic said the accreditation from KPMG, which followed a review of its financial controls, regulatory compliance, internal access controls and other areas, was an industry first and a significant step for the company.

The UK-based company is known for its Elliptic Vault product, a so-called deep cold storage service which allows bitcoin holders to store holdings of the digital currency in secure locations offline to shield them from hackers.

“KPMG’s accreditation is an important milestone,” James Smith, Elliptic’s chief executive officer, said in a statement on Monday.

“(It) demonstrates to our customers that we have the rigorous internal processes and controls expected of any traditional financial services provider,” he said.

The accreditation, known formally as the ISAE 3402 Type 1 review, comes after a number of scandals involving bitcoins spooked potential enthusiasts of the digital currency.

Last week, Bitstamp, one of the largest exchanges for bitcoin trading, said it had suspended its service after a security breach, resulting in the loss of about 19,000 bitcoins.

In February last year, Mt. Gox, once the world’s biggest bitcoin exchanges, lost 750,000 bitcoins held by its users and 100,000 of its own due to hacking.

According to the bitcoin price at the time, the Mt. Gox losses come to about $480 million, or 7 percent of the world’s estimated total.

Bitcoin, the best-known virtual currency, started circulating in 2009. Unlike conventional money, bitcoin is generated by computers and is independent of control or backing by any government. A bitcoin is worth $271.77.

Elliptic became the first Bitcoin firm to offer an insured storage service in January 2014, which was taken at the time as a sign the bitcoin industry was maturing.

In July last year, venture fund Octopus invested 1.2 million pounds’ ($1.8 million) in Elliptic.

Reporting by Andrew Winterbottom; editing by David Clarke

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