Winklevoss Twins’ Gemini Exchange Gets Trust License – BitBeat
By Paul Vigna
Cameron, left, and Tyler Winklevoss in the New York headquarters of their Winklevoss Capital. —Paul Vigna/The Wall Street Journal
A bitcoin exchange founded by Tyler and Cameron Winklevoss announced on Monday that it received regulatory approval from New York’s financial regulator to operate as a financial-services firm.
New York State Department of Financial Services granted Gemini Trust Co. a limited liability trust charter, holding it to the regulatory standards of a trust bank and allowing it to operate as a regulated financial-services institution.
The trust charter is just the second one granted by the DFS to a bitcoin-related business. ItBit, a New York-based bitcoin exchange, received one in the spring. The charter gives Gemini the ability to offer services as a registered money transmitter, and be held to the same capital rules and regulatory structure as established banks like State Street STT -1.41% and Rockefeller Trust Co.
The trust charter is from a state institution, but in practice gives Gemini the ability to take deposits from any customers and operate in all 50 U.S. states.
This is the third bitcoin-related institution to which the DFS has given regulatory approval. Circle Internet Financial earlier this month received the first BitLicense – a separate kind of charter designed especially for digital-currency businesses; 22 other businesses have applied for the latter, and more approvals are expected.
“We are continuing to move forward on licensing and chartering virtual currency firms,” DFS acting superintendent Anthony Albanese said in a release. “Smart, targeted regulation that helps protect consumers and prevent illicit activity is vital to the long-term future of this industry.”
Gemini will be begin operations on Thursday. The exchange will allow customers to buy, sell, and hold bitcoins. Bitcoin deposits will be held in an offline vault; fiat deposits will be held with New York-based commercial bank Signature Bank. The exchange is open to both individual and institutional investors, but the twins are keenly focused on attracting institutional business.
It is the second bitcoin-related product launched by Winklevoss Capital. In February 2014, it launched its own bitcoin index, the Winkdex. It is still awaiting regulatory approval from the SEC for a planned bitcoin ETF it first proposed in 2013.
The attempt to lure Wall Street to trade bitcoin has taken a backseat to the Street’s own interest in appropriating the technology. Still, there is a movement to attract institutional investors into bitcoin. There are now two exchanges that meet regulatory requirements – Gemini and ItBit. In March, Bitcoin Investment Trust GBTC 0.00% launched an over-the-counter bitcoin ETF; the Winklevoss twins are still awaiting SEC approval for their own ETF as well.
As with the ETF, the idea behind Gemini is to create stable, reliable products for trading bitcoin that will appeal to institutional investors outside the niche market that has so far defined bitcoin trading. Large institutions have so far had few reliable options for investing in the digital currency. The biggest bitcoin exchanges are currently all based outside the U.S.
“Bringing them (investors) into the fold is going to be a large catalyst for bitcoin,” Cameron Winklevoss said.
A lot has changed in the digital-currency world since the twins first announced their intention launch Gemini. Back then, the biggest issue was bitcoin’s volatility and plunging price. Now, the price has stabilized, but the focus has shifted. There is intense interest over bitcoin’s underlying technology, broadly called the blockchain, and much less over bitcoin itself. Despite this, the twins believe that the digital currency has a future.
“You can’t just hack your way through it,” Cameron said of building up bitcoin as an asset class. “We have to put the plane together in the hanger, do a bunch of test flights, and then take off.”
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