London-based Coinfloor is setting up an over-the-counter market for Bitcoin. aimed at Institutional Investors, amid growing interest in the digital currency from Hedge Funds and Investment Banks.

Mark Lamb, Coinfloor’s chief executive, said: “We’re seeing a lot of demand… Most of the Bitcoin liquidity is happening off books – it’s a similar problem to the equities market, where you see a lot of these orders happening on dark pools.”

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During the Inside Bitcoin New-York 2014 Conference, a representative for Bloomberg also conceded that traders were already exchanging Bitcoins, but most of them through private negociations. He added that the IRS new ruling which will treat Bitcoin as a Commodity will facilitate traders to list it, in a very short period of time.

The company, which launched last year, is partnering with a Financial Conduct Authority-regulated trading firm to help financial institutions meet bulk orders for the digital currency. The silent partner will act as a “market maker” – buying and holding Bitcoin to ensure investors can get the currency when they need it.

Tom Robinson, director of the UK Digital Currency Association, said: “We are seeing growing interest from institutions, especially hedge funds. We’ve had interest from some investment banks in Europe as well.”

Some institutions in the US have already made bets on Bitcoin: the Wall Street hedge fund Fortress Investment earlier this year revealed that it had bought $20m (?12m) of the virtual money and has reportedly invested $10m in the London-based Bitcoin exchange Bitstamp.

Mr Robinson’s Bitcoin storage business Elliptic also handles the crypto-currency for US-based Falcon Global Capital, the world’s first Bitcoin investment fund, which launched earlier this year.

Coinfloor, Bitstamp and Elliptic are part of a wave of UK start-ups aiming to turn London into the centre of the emerging Bitcoin industry, spurred by the collapse of MtGox earlier this year.

The Tokyo-based MtGox, once one of the biggest Bitcoin exchanges in the world, froze withdrawals for weeks before filing for bankruptcy, amid accusations of theft from the service and financial mismanagement.

Mr Lamb said: “The bankruptcy of MtGox was an event that is often seen by the public and investors as a pretty negative event for Bitcoin; but for most entrepreneurs, we’re seeing it as an incredible opportunity in the space.”