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Look out NASDAQ, Here Comes the Winklevoss Gemini Exchange

Op-ed - Look out NASDAQ

“Gemini” means twins in Latin, and it’s also the name of the new Bitcoin exchange created by super-entrepreneurs and venture capitalists Cameron and Tyler Winklevoss. After its public launch in the spring, the New York -based Gemini exchange, announced in January on the Winklevoss Capital website, will be a fully regulated Bitcoin exchange built on rock-solid compliance and backed by the U.S. regulatory and banking infrastructure. The Winklevoss twins discussed their plans in an interview with Vice News.

Last month, investors including three of the world’s most respected financial institutions – The New York Stock Exchange (NYSE), a subsidiary of USAA, and BBVA Ventures – invested $75 million in the Bitcoin service provider Coinbase, bringing its total capital to $106 million. According to Coinbase, that was the first time financial institutions made a major investment in a Bitcoin company. Besides buying and selling Bitcoin, the Coinbase Exchange allows customers worldwide to hold and use US dollars. Therefore, as noted by David Bailey in a recent Bitcoin Magazine article, Coinbase can be considered as the first global bank, and “the AOL of Bitcoin.”

Not so fast, say the Winklevoss twins. In their opinion, Coinbase launched their exchange before completing the necessary regulatory homework. Vice News reports that regulators in New York and California haven’t yet issued all the applicable licenses. Mark Williams, a finance professor at Boston University, believes that Coinbase’s attempt to start business without all the required licenses was very risky. According to him, building trust with regulators is key to Bitcoin’s future.

The Winklevoss twins believe that the main selling point of Gemini will be its strict compliance with all applicable regulations and its firm base in the US banking system – a major U.S. bank is involved, and no money will cross borders.

According to a statement issued by the twins: “[I]t’s a U.S. home for people, where they don’t have to wire their money overseas, where their money can actually stay in America, where they can buy and sell bitcoin from a company that’s regulated and has consumer protections. We see this as really critical infrastructure to building bitcoin and realizing its potential. [W]e’ve had open dialogue with regulators for almost a year now and we feel that we’re close and we want to make sure that we truly [are] licensed, that’s one of our principles. We don’t want to half bake it, or hack our way through and be on the fringe of it, we really want to do this the right way and get the blessing of the regulators. And we do feel that that’s around the corner.”

An interesting issue raised by the Vice News article is the “sell-out” of Bitcoin, which apparently is taking distance from its cypherpunk roots in underground crypto-anarchist circles and embracing Big Capital and Big Government. Is the mainstreaming of Bitcoin inevitable and necessary for its adoption by the masses? Some say the nature of the Bitcoin protocol makes it impossible to completely eliminate its potential for anonymous and untraceable transactions. Is that is the case, even in a Bitcoin economy that becomes more and more mainstream and regulated, there will always be underground pockets of unconstrained use.

In addition to Gemini, the Winklevosses are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN. The launch date is unknown, but the twins toldInside Bitcoins that everything is proceeding according to plan.

They added: “For those who are up for that and want to actually buy and sell bitcoin the asset, they can do so at For those that just want bitcoin asset exposure or those, like institutions, pension plans, 401(k)s, etc., that cannot invest in bitcoin themselves, their only avenue to gain bitcoin exposure will be through a structure like an ETF where they are purchasing a security and not the underlying asset itself.”

According to the SEC filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex. That will be an interesting option for those traditional investors who are persuaded that the dollar exchange rate of Bitcoin will rise in the mid- and long term, but prefer not to hold Bitcoin.

Images via Gemini.