Coinbase Inc. well-known bitcoin payment processor and web-wallet, has announced its intention to open the first licensed U.S.-based Bitcoin exchange on Monday. Following $106 million in backing, from sources  including the New York Stock Exchange. the company believes it can now provide a credible exchange service to U.S. customers.

The Coinbase exchange is online and available to U.S. residents; but only in certain states, see below.

According to The Wall Street Journal , Coinbase’s founders have been working for five months to secure money exchanger licenses from state financial regulators. Currently the company has approval from half of U.S. states, including New York and California. While the exchange will be open to the public, Coinbase can only do business with residents of states that have given approval.

While Bitcoin exchanges do require a license to be money transmitters from local government agencies, there is currently no license that exists in the United States for exchanging in bitcoins. New York is the only state close and is  infamous for its “BitLicense” proposal put forward by Superintendent Benjamin Lawsky of the New York Department of Financial Services (NYDFS), which has been broadly criticized by the Bitcoin industry and community .

The states that Coinbase’s exchange will be available in may match the states that the web-wallet allows USD wallets. as seen on a recent blog post.

Coinbase co-founder Fred Ehrsam said that the service will take a fee of 0.25 percent from most transactions, but will not charge any fees for the first two months. The exchange will be initially only open to U.S. residents, added Chief Executive Brian Armstrong, but the company has upcoming overseas plans.

Bitcoin exchanges and a speculative past, growing future

The lack of consistent and easily understood regulation is seen as an obstacle to Bitcoin-related business, however exchanges have been emerging and flourishing. Although the backbone of the Bitcoin economy, exchanges do have a rocky history.

The best known Bitcoin exchange was the doomed Mt. Gox, which collapsed after an alleged hack and the loss of more than 700,000 bitcoins. This loss has since been tentatively connected to insider fraud by Japanese authorities. but the end result is still the same: a major exchange collapsed and the media reported it as such.

Exchanges provide the lifeblood of bitcoin liquidity and give speculators a platform to trade value with bitcoins. Exchanges, however, are difficult for everyday consumers and merchants to enter into because of obscurity, bank transfer and identity requirements, and advanced skills. Companies such as Coinbase and Circle provide web and mobile-based wallets that make it easy for consumer to purchase and store bitcoins. Wherever, Coinbase and BitPay give merchants a method to accept and liquidate bitcoins.

There are very few U.S.-based bitcoin exchanges, the notable examples are CampBX, Kraken, and Coinsetter; the three largest exchanges, representing over 80 percent of all BTC volume, Bitstamp and BTC-e exchanges are in the European Union, while Bitfinex is based out of Shanghai, China.

Bitcoin regulation in the U.S. has always been up in the air, although there has been little movement against popular Bitcoin exchanges and services in the states. In fact the proposal of BitLicense has been one of the first forays into regulating Bitcoin in the U.S. and Coinbase receiving approval from multiple states represents a huge step forward in credibly for Bitcoin-related operations.

The news of Coinbase’s plans to open an exchange comes alongside news that the Winklevoss twins, Tyler and Camero Winklevoss, also intend to open a NASDAQ-like bitcoin exchange called Gimini .

About Kyt Dotson

Kyt Dotson is a Senior Editor at SiliconAngle and works to cover beats surrounding DevOps, security, gaming, and cutting edge technology. Before joining SiliconAngle, Kyt worked as a software engineer starting at Motorola in Q&A to eventually settle at Pets911.com where he helped build a vast database for pet adoption and a lost and found system. Kyt is a published author who writes science fiction and fantasy works that incorporate ideas from modern-day technological innovation and explore the outcome of living with those technologies.