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Summary:

Stepping in where the banks won’t or don’t dare, Elliptic now has funding for its secure and insured Vault service, and it wants to expand its repertoire.

Coin image adapted from Flickr user Antana
photo: Gigaom Illustration

Europe’s top banking regulator may think banks should stay away from bitcoin and other virtual currencies, but that’s good news for at least one company — Elliptic, which has just scored $2 million in seed funding from Octopus Investments and several angels.

Elliptic offers a secure, insured bitcoin service called Elliptic Vault for retailers, hedge funds, bitcoin exchanges and other companies that are trying to dabble in this new world of so-called cryptocurrencies. According to CEO James Smith, the advice of the European Banking Regulator “opens up the playing field for people like us who can step into that void.”

Smith said the funding would be used to make Elliptic Vault easier to use:

“We want to make it very easy for companies to use. If they’re used to other types of financial products… a hedge fund is used to having everything with a custodian, normally a bank. The way reporting fits into their systems is quite standardized, but bitcoin doesn’t fit easily into that picture because banks won’t handle it, and so on.”

Elliptic Vault provides both cryptographic and physical security for customers’ bitcoins, Smith said, adding that the firm also uses geographically distributed backups. Elliptic uses a “large international diversified” insurer, he explained.

The British company doesn’t only want to spruce up its Vault product, though. Smith, who was a derivatives trader in a previous life, told me Elliptic sees many opportunities beyond storage — reporting and analytics, auditing and accounting services.

“We also think the way exchange is done between digital and fiat currencies has got some work to do in that area,” Smith said. “We don’t want to be an exchange, but we think the way those trades are cleared and settled needs a lot of work.”