A British cryptocurrency exchange is launching a Visa card that it says will allow users to spend their bitcoin savings.
London Block Exchange (LBX), a newly-launched website that will allow users to buy and sell cryptocurrencies, plans to launch a spending card in the coming weeks that will convert their holdings in bitcoin and other virtual currencies to pounds and let them spend it on the high street.
The "Dragoncard" is designed to counter a key criticism of bitcoin - that it is largely a commodity and has few applications in the real world. Only a handful of major companies accept payment in bitcoin, which has been blighted by concerns about money laundering and other criminal activity.
When a shopper spends money with the card, LBX will pay the retailer in pounds and recoup the money from the shopper's online wallet, converting one of the cryptocurrencies they hold into pounds, charging a 0.5 per cent fee.
Other firms have attempted to launch bitcoin-based cards but LBX is the first to convert the cryptocurrency to pounds, and has been provisionally approved by the Financial Conduct Authority, the UK's financial regulator. It has received £2m in funding and is chaired by Adam Bryant, a long-time Credit Suisse banker who ran the Swiss bank's macro hedge fund team.
Bitcoin, as well as other cryptocurrencies including Ethereum and Ripple, has exploded in value this year. Its price has risen from under $1,000 at the start of 2017 to almost $7,000 today. Many senior figures in the financial industry now see it as a bubble and warn that it will not replace the stability of the existing financial system.
Transactions with bitcoin have become slow due to the increased activity on the network in recent months, which critics say make it unsuitable as a payment method. By handling the conversion itself, rather than at the point of transaction, LBX hopes to remove this barrier.
Benjamin Dives, LBX's chief executive, said: "Despite being the financial capital of the world, London is a difficult place for investors to enter and trade in the cryptocurrency market.
"We’ll bring it into the mainstream by removing the barriers to access, and by helping people understand and have confidence in what we believe is the future of money."
Visa has previously raised concerns about cryptocurrency cards. Other attempts to launch such cards were recently forced to withdraw services to consumers outside the EU, with Visa saying the regulations were currently unclear.
LBX said it did not see such issues because conversions are only done in pounds.
