Estonian Bank LHV has made further links with the digital currency space, having partnered with UK exchange Coinfloor to handle user deposits.

LHV has been increasingly active in bitcoin, signing a deal with Coinbase in September to bring the company's bitcoin buying and selling services to 13 european countries.

Andres Kitter, head of retail at LHV Bank, said:

LHV previously announced a project that set out to explore the legal framework and potential applications of blockchain technology in the banking sector.

At the time, Priit Rum, head of communications at LHV, told CoinDesk the bank was interested in the technological side of digital currencies, as it hoped to simplify bank services and make them more efficient.

The news comes amid increasing tension between bitcoin companies and the banking sector. Securing banking partnerships has hindered the operations of bitcoin companies, often forcing them to halt part of their offerings.

"Coinfloor is a strong partner that takes compliance very seriously and for us as a bank this is very important," said Kitter.

Mark Lamb, CEO of Coinfloor, praised the bank's bitcoin expertise, saying that most banks understood bitcoin on a surface level. "Coinfloor is thrilled to be partnering with LHV," he added.

Coinfloor's website states that it holds accounts with several other banks in Europe to avoid any downtime to its services. Previously, the exchange had partnered with Polish Bank PKO Bank Polski for its services, however LHV is now its main partner in the region.

Lamb added:

Besides banking partnerships, the exchange seeks to foster user confidence via monthly solvency reports, which act as a public audit of customers' balances. Coinfloor also stores 100% of its bitcoin in multisig cold-storage and claims to never hold users' bitcoin on a server.

A spokesperson said:

Coinfloor started operating in October 2013, following an undisclosed amount in funding from VC firm Passion Capital.