BitInstant is reportedly set to launch an international debit card based on the BitCoin virtual currency. That's according to Coding In My Sleep, which has published the transcript of an online chat in which BitInstant co-founder Charlie Shrem allegedly confirmed that the company is in the final stages of developing the card, which would launch within the next six to eight weeks. Shrem also posted a mockup of the Bitcoin card, embedded above.

According to Shrem, the card will operate as an international MasterCard, and will be issued by two unnamed banks (one domestic, one international) with which BitInstant has partnered. The first 1,000 cards will reportedly be given away for free, with the rest priced at around $10. Users would be able to add funds to their cards at a one percent fee, with ATM withdrawal charges set at $1.50. (Shrem said BitInstant was able to lower its rates by cutting out some of the middlemen involved with US-only Bitcoin cards.)

The front of each card contains a QR code (which users can scan to execute transactions under $1,000), with a Bitcoin address embossed on the back. All card issuers, however, will have to comply with local laws and regulations, meaning applicants would have to provide proof of identification and therefore abandon the anonymity they'd find in traditional Bitcoin networks. This would undoubtedly mark a major milestone in bridging the virtual with the physical, though BitInstant has yet to issue a formal announcement on the matter.

Update: MasterCard has responded to the rumors, saying that it is not aware of BitInstant developing a program like this and has "no relationship" with the company, meaning plans for a Bitcoin-based MasterCard would have to be preliminary at best.