The Winklevoss twins are officially in business with their bitcoin exchange now that the New York State Department of Financial Services has given them the go-ahead to start operating. The new bitcoin exchange is called Gemini Trust Company LLC.
Entering a volatile market
The Winklevoss’ claim to fame was accusing Mark Zuckerberg of stealing their idea about social networking to start Facebook. After suing Zuckerberg over Facebook, they became entrepreneurs and have now sunk significant resources and assets into the bitcoin market, which has had a topsy-turvy past.
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The digital currency was once used for illicit transactions, especially on websites like Silk Road, which has since been shut down by federal law enforcement. In spite of this past, however, hardcore fans like Cameron and Tiler Winklevoss maintain that bitcoin is the future and can be used for so much more than transactions.
They are two of many bitcoin enthusiasts who have said that lack of regulation is why the digital currency hasn’t reached widespread adoption. The value of bitcoins has been very volatile over the years, and now several high-profile bitcoin exchanges have gone belly-up. Mt. Gox, once the most well-known bitcoin exchange, filed for bankruptcy in February 2014 after admitting to losing thousands of bitcoins.
Regulators have been debating about how to treat digital currencies for years, and finally this year the Commodities Future Trading Commission officially categorized them as a commodity.
Gemini becomes second bitcoin trust
Bloomberg‘s Olga Kharif reports that Gemini is now the second bitcoin-based firm to be designated as a trust. ItBit Trust Co., another exchange, received the agency’s approval in May.
The Winklevosses said in a statement today that Gemini will offer protection for bitcoin owners against money laundering and fraud. They also emphasized security and said their goal is to build a bridge between bitcoin and “the financial mainland.” Tyler Winklevoss is the chief executive officer of Gemini and said they wanted to create a bitcoin exchange “that both Main Street and Wall Street could use and trust.
How Gemini works
It will be free to transfer money into and out of accounts at Gemini. There will be about a 25 basis point fee on trades of the digital currency for both buyers and sellers. The exchange officially opens for trading on Thursday as a chartered limited liability trust.
This status allows it to operate throughout the nation without being required to apply for individual money-transmitter licenses in each state that requires one. The status also enables Gemini to possibly expand into other services targeting institutional investors, like holding assets in collateral for transactions.