Circle, a Boston-based Bitcoin startup, announced last week that it had completed a US $50 million round of funding. Among the list of investors were two newcomers with somewhat conspicuous names—Goldman Sachs and IDG Capital Partners. While it is not know how much each of these companies invested, the involvement of Goldman Sachs marks the first time that a major U.S. bank has taken the plunge into the Bitcoin startup scene. Tom Jessop, the managing director for strategic investments at Goldman Sachs explained the rationale for the company’s involvement in a blog post on the Circle website. While notably avoiding the word “Bitcoin,” he was quoted as saying: ...as the financial services industry continues to become more digital and open, we see significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation. We think that Circle’s product vision and exceptional management team present a compelling opportunity in the digital payments space. In fact, the product that Circle offers is still evolving. Jeremy Allaire, the founder of Circle, has repeatedly expressed a desire to expand the bitcoin userbase by developing services that make Bitcoin a palatable payment option for non-techies. To this end, Circle provides bitcoin users with accounts where they can hold and transfer bitcoins through a third-party service that shields them from the rather complex details of the Bitcoin network. In the process, customers forfeit some of the benefits of Bitcoin’s most defining features. They do not hold the private keys for their bitcoins and, as a result, they do not personally sign off on transactions. But in return, customers get full U.S. Federal Deposit Insurance Corporation protection on their deposits. Circle has also announced that it will begin taking deposits in U.S. dollars, which can then be used to make payments in either bitcoin or USD. By giving customers the ability make bitcoin transactions without having to actually store the digital currency, Circle assumes all of the investment risk resulting from the high volatility of bitcoin’s market value (exchange rates have swung from a high of $674 to a low of $177 in the last year, though recent rates have held steady). Circle’s main competitor, Coinbase, which operates out of San Francisco, received a comparable boost in funding this January when it raised $75 million. That deal involved some heavy hitters as well, including the New York Stock Exchange and Union Square Ventures. But with this week’s investment, Goldman Sachs became the first major U.S. bank to embrace Bitcoin as a viable payment option. According to Barry Silbert, who spoke this week at a Bitcoin conference in New York City, the willingness among elite financial institutions to delve into the digital currency space is only likely to grow. “There’s some very positive news that will come out, I think in the pretty near future which is going to create some air cover that is going to give lots of banks the opportunity to be more public about what they’re doing,” said Silbert. “Pretty soon, it will be ‘We’re smart also. We’re experimenting.’” Silbert declined to elaborate on the exact nature of these announcements. But one eminent development will be the resolution of New York’s BitLicense proposal, which the New York Department of Financial Services has been crafting for over a year. In its final form, the NY BitLicense is expected to resolve some of the legal grey areas surrounding Bitcoin and answer the question of who is and who isn’t a money transmitter when dealing with bitcoin transactions. A public commenting period for the proposal began in late February and bitcoiners are now awaiting a final version.