BitPay raises $2M VC round, even as Bitcoin comes under fire

Founders Fund, run by PayPal co-founder Peter Thiel, leads venture financing round for Bitcoin PSP company BitPay.

Payment Service Provider (PSP) company BitPay, which bills itself as “the world leader in Bitcoin business solutions”, has announced that it has raised a further $2 million financing round led by venture capital investor Founders Fund. It sounds like an ideal VC-company match — Founders Fund is run by Peter Thiel, who co-founded PayPal and led it as both Chairman & CEO, before PayPal was sold to eBay for $1.5 billion.

BitPay is looking to do for the Bitcoin what PayPal did for Internet merchants — allow (mainly online) to accept Bitcoin payments from customers, in an easy and seamless (and riskless) way. BitPay reports that it now processes about $5 million per month in Bitcoin payments for goods and services worldwide. It claims to be signing up more than 100 new merchants per day.

In the meantime, as we reported earlier, the real PayPal is still churning its wheels in trying to decide whether or not to accept Bitcoin and to process Bitcoin-denominated payments.

This announcement comes a day after we reported that the US government is trying to take a bite out of Bitcoin, and stunt its growth (in our view), by freezing a mobile payments account associated with leading Bitcoin exchange Mt. Gox. The CFTC is looking at regulating Bitcoin trading. And it is not only US authorities who are concerned about the (potential) dark side of an unregulated and anonymous global payment system. UK authorities, including HM Revenue and Customs (the UK’s IRS), the Serious Organised Crime Agency, Home Office and GCHQ (the intelligence listening service) held a one-day conference in London on Monday to review how Bitcoin works, and how criminals might seek to exploit the electronic cash system, which is currently unregulated by any financial authority. One of the ideas discussed was creating a regulated Bitcoin exchange, which would go some way to addressing concerns about criminality by requiring users to provide proof of identity.

Clearly, as BitPay’s stats show, Bitcoin is becoming more and more a part of the payment system mainstream. And clearly, as our earlier article today shows, the US (and other) regulatory authorities want to control what is going on with Bitcoin.

This promises to be an interesting story to continue to follow. Stay tuned to LeapRate…

For the full BitPay press release click here.

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