An Australian firm offering trading in Bitcoin is thinking of getting in wealth management, a report says.

Bit Trade Australia, which operates in the controversial market for cyber currency Bitcoin, is applying for an Australian Financial Services Licence to enter wealth management and merchant services, according to the Australian Financial Review.

The publication said Bit Trade, one of Australia’s largest Bitcoin exchange providers, has engaged lawyers at Holley Nethercote to launch its AFSL application within the next two weeks.

The report quoted Ron Tucker, managing director of Bit Trade, as saying that he wanted to make sure the company remained “on the right side of any regulatory considerations”.

“In the long term, we would consider wealth management and ­super­annuation,” Mr Tucker is quoted as having said.

Bitcoin, which is a cyber-currency developed a few years ago, has become controversial because of its popularity not just with investors distrustful – perhaps rightly – of state fiat currencies in an era of quantitative easing, but also because of its alleged potential conduit for illicit transfers by drug dealers and terrorists. Regulation of Bitcoin varies by jurisdiction. In China, a number of Bitcoin exchanges have gone bust and the average lifespan of a Bitcoin exchange is around nine months, according to a recent report by the South China Morning Post publication. The People’s Bank of China has imposed severe restrictions on Bitcoin, for example, encouraging a flow of business to Hong Kong. In Australia, National Australia Bank recently informed clients it no longer wished to provide accounts for people trading in the digital currency. Elsewhere in Asia, the Monetary Authority of Singapore has moved to regulate transactions in Bitcoin.

Bitcoin is seen as an inelastic type of money as its quantity cannot be indefinitely increased. According to one description at Wikipedia, Bitcoin “is a digital currency first described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system”.

The creation and exchange of Bitcoin is based on an open-source cryptographic protocol and is not managed by any central authority - the latter fact being something that might frighten politicians (possibly not a bad thing). Each Bitcoin is subdivided down to eight decimal places, forming 100 million smaller units called satoshis. Bitcoin can be transferred through a computer or smartphone without an intermediate financial institution such as a bank. Again, such features, while now part of our electronic lives, have prompted calls by regulators such as in the US to impose oversight.

Using an analogy with the language of the gold market, Bitcoin processing is secured by servers called “Bitcoin miners”. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically. Each new ledger update creates some newly-minted Bitcoin; a crucial feature is that the number of new Bitcoin units or “Bitcoins” created in each update is halved every four years until the year 2140 when this number will decline to zero. After that time no more Bitcoins will be created - the total number of Bitcoins will have reached a maximum of 21 million Bitcoins.

According to the Bit Trade Australia website, the spot price of Bitcoin, in Australian dollars as of yesterday afternoon (in London) was A$669.53.