Elliptic, a UK startup behind an insured bitcoin storage service, has raised $2 million in a seed funding round led by Octopus Investments.
Banking on business from bitcoin holders fearful of losing their horde to online hackers, Elliptic launched its vault in January, promising to store user's cryptographic keys on offline servers in a secure location.
The firm will use the new funding on product development and customer acquisition, building on a client base that includes hedge funds, law firms and the new Jersey-based Global Advisors Bitcoin Investment Fund.
James Smith, CEO, Elliptic, says: "We at Elliptic believe that the future of finance lies in digital assets, and as such it is essential that we work to both legitimise and protect the likes of Bitcoin. But digital currencies are just the start - the block chain technology behind Bitcoin has the potential to revolutionise a wide range of industries."
Explaining the decision to invest in Elliptic, Octopus's Rebecca Marshall cites a recent European Banking Authority report which warned banks off of holding bitcoin, a stance which could benefit alternative players."
Banks' cautious approach to the virtual currency is underlined in a new video on the subject from ING senior economist Teunis Brosens, who warns that bitcoin's goal of doing away with central authorities "could be bitcoin's undoing as without a regulating authority, price and exchange rate volatility complicates its adoption as real money".