Estonia-based bank LHV has announced a new project that will explore the legal framework and potential uses of bitcoin’s block chain technology in banking so it might develop bank services for bitcoin and other digital currencies.
“We are interested in the technological side of digital currencies as we hope it could make bank services more simple and efficient,” Priit Rum, head of communications at LHV, told CoinDesk.
The project manager will examine all digital currencies, not limiting itself to bitcoin.
For now, the bank won’t engage in trading bitcoin, Rum said, but more likely, could develop its payments system using block chain technology.
The company claims to be the first bank in the world to implement such a program, stating:
“We have been aware of crypto currencies for some time now […] we decided last month that establishing a side project to explore the block chain technology and analyse possibilities of cryptocurrencies would be a good opportunity to stay with the innovation.”
Regulatory uncertainty remains
While the news of this action by a major bank is perhaps encouraging, in Estonia, bitcoin is tangled in regulatory uncertainty.
Earlier this year, the country’s central bank issued a warning against bitcoin and digital currencies calling it a Ponzi scheme, saying “virtual currency schemes are an innovation that [deserve] some caution”, but that it would continue to monitor their development.
Shortly after, local bitcoin trading site BTC.ee put a halt on trades, coming under pressure from Estonian authorities who challenged the site’s compliance with the Money Laundering and Terrorist Financing Prevention Act.
Said Rum:
“LHV is a regulated bank and we take all the regulations and guidelines very seriously […] For us, all the questions about ‘know your customer’ and concerns of money laundering have to be dealt with before we can really develop new bank services using new technology.”
Local enthusiasm grows
Estonians have been enthusiastic about bitcoin for some time, despite the regulatory difficulties the domestic ecosystem faces.
The country’s capital Talinn had a successful week-long bitcoin showcase last month, during which bitcoin advocates came together to educate those new to the digital currency and boost its popularity.
For more on the latest developments in the eastern European economy, read our most recent report.
Estonian parliament image via Shutterstock