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The Gemini Bitcoin exchange, one of several Bitcoin-related projects that the Winklevoss twins have in the pipeline, has obtained two key approvals from New York regulators.
The New York State Department of Financial Services (NYDFS) has granted the Gemini Trust Co. approval for its Articles of Organization. The NYDFS also granted Gemini an exemption from the FDIC deposit insurance requirements of New York's banking laws.
It's all been part of an arduous process to gain the solid regulatory backing needed to make Gemini the top choice for institutional investors.
The Winklevoss twinsThe Winklevoss twins, Tyler and Cameron, set up the Gemini exchange as a trust company under New York regulations. It gives the Bitcoin exchange many of the same privileges as a bank, including the ability to take deposits.
But as a banking trust, Gemini can't lend money. Lending isn't necessary for Gemini to function as a Bitcoin exchange, and it would have lengthened the approval process even more.
The new approvals make the Gemini Trust Co. an "established entity," which means it can now pursue the formal relationships with banks and vendors that will allow it to actually launch the exchange.
The approvals have Gemini on the "one-yard line," Cameron Winklevoss told CoinDesk, although it still needs a few more approvals from the NYDFS.
The Winklevoss twins have pursued the banking charter path rather than apply to the NYDFS for a BitLicense specifically because they wanted to serve institutional investors.
"I don't know if anyone has made this distinction enough. If you want to service institutional customers in New York, the BitLicense is not sufficient," Cameron Winklevoss told CoinDesk. "There's a good chance that when you get one you'll have to curtail or stop actually servicing NY institutions."
The charter also means the Winklevoss Bitcoin exchange will have the option to offer derivatives, swaps, and futures, although that will require further approval from the Commodity Futures Trading Commission (CFTC). The CFTC ruled last month that Bitcoin is a commodity, and so such trading falls under its jurisdiction.
Gemini will not be the first U.S.-based Bitcoin exchange – Coinbase and ItBit went live earlier this year. ItBit, like Gemini, operates as a trust company with NYDFS approval.
But here's why institutional investors are likely to prefer the Gemini Bitcoin exchange
What Sets the Gemini Bitcoin Exchange Apart Part of the appeal of the Gemini Bitcoin exchange is the painstaking effort the Winklevoss twins have made to ensure it's fully compliant with all regulations. That goes a long way to building confidence in an institution – particularly a new one based on a digital currency that itself is only six years old.
But the Winklevoss twins also believe Gemini has features that will make it more appealing to institutional traders.
"We describe Gemini as an E-Trade, because we'll have a web interface, like Nasdaq, because we have a matching engine order book, and like DTC [Depository Trust Company] because we are also a clearing and settlement house. We are basically all three functions collapsed into one," Tyler Winklevoss told Modern Trader. "When we discuss what we're doing with the institutional crowd, they get really excited about the clearing and settlement aspects of what we're doing, and the reduction in costs. Bringing that friction down is a massive opportunity."
The Gemini Bitcoin exchange also fits into a larger trend of rapidly increasing Wall Street interest in the digital currency. Last month, for instance, nine major world banks announced they had formed a partnership to study ways to incorporate Bitcoin into the global financial markets, an alliance that since has grown to 22.
The Gemini exchange is just one Bitcoin investing initiative the Winklevoss twins have undertaken.
They also are awaiting U.S. Securities and Exchange Commission approval of the Winklevoss Bitcoin Trust, a Bitcoin exchange-traded fund (ETF) that will trade under the ticker Nasdaq: COIN. Approval of the Winklevoss Bitcoin ETF is expected before the end of the year.
The Winklevoss twins also created their own Bitcoin price index, the Winkdex, which uses a weighted formula based on trading at the top three Bitcoin exchanges. But for now, they're very much focused on launching the Gemini Bitcoin exchange.
"Our days are focused on building what we consider a pure-play Bitcoin exchange," Tyler Winklevoss told Modern Trader. "We need to make sure it's an active, healthy market with the right participants, so that when people show up, there's liquidity, a full order book and everything works as expected and advertised. We're trying to do this one thing really right, in a way that the community hasn't seen yet."
|Do you have a relationship with Mark in any capacity today? What would you say to him if you could? What do you think of what Facebook has become?||We don't have a relationship with Mark. The last time we saw and spoke with him was at the settlement in 2008, and before that was back at Harvard. We do have a relationship with Dustin Moskovitz, we saw him at Burning Man three years ago, and we've kept in touch with him. We've grabbed coffee with him in SF and also got a tour of the Asana offices (his start-up). We're pretty friendly with a lot of people around Mark, but we don't have a relationship as of this moment with him.|
|Hindsight's always 20/20, but it seemed like a lot of the things that happened were unnecessary. There was a way for everyone to be happy and kind of win, and it didn't have to be a zero sum situation. Hopefully we can all learn from that as we move forward and become better people and learn to find the path of least resistance.|
|It's certainly quite an amazing company. I don't think any of us had any idea of how big it could actually be. I think the scariest thing is that it's probably not done growing anytime soon. We're really proud of the part we played, which we think was certainly material to getting it going and I think Mark has certainly done an incredible job shepherding it and leading the company to what it is today. I think that I'm really impressed with what it is and what it most definitely will be.|
|Do you have any thoughts about the ugly contention that's been going on the last several months in the Bitcoin dev community over hardforking to relax the blocksize cap?||We're definitely watching the block size debate, I don't have a super strong opinion, I think everyone agrees that the block size in some way or another should increase and will have to increase in order for Bitcoin to fulfill its promise. We're keeping a close watch, I think its really interesting how the community's is proposing things and it's working in a very democratic process and people are free to propose things and obviously it's a consensus-based system. I think we're seeing that at play and it'll be exciting and interesting to see it unfold. I think that Bitcoin will get through this, it's weathered a lot already and I think its here to stay. I think its just one more of those things we'll get through.|
|How has your relationship as brothers affected your business endeavors over the years?||The fact that we're twins and best friends has been a huge asset. We've definitely always used it to our advantage. It's obviously not always easy getting along all the time, but we've managed to do it and we've made a great team. Both in sports during our rowing career and now financially working together in business. I think trusting your partners is something that's super important, and we have that built in because we're twins and if I do something wrong to him then it's pretty much like doing it to myself. So it's been a great asset and we've tried to make the best of it.|
|I'll piggy back on this Winklevii, how did/do you feel about the craziness that has been Dogecoin and other altcoins?||I haven't personally looked that much into altcoins. I think that with a protocol like bitcoin there's a huge first mover advantage and a lot of network effects and bitcoin has a great head start in that regard in terms of the size of it's mining network and how much infrastructure it has going for itself. I think that the altcoins are very interesting. Some of the other blockchain efforts like Ripple and Ether are interesting, but we haven't spent a whole lot of time with them because we think there's a lot to be done still in bitcoin blockchain 1.0 if you will.|
|What are you doing (if anything) to push 'consumer' awareness of bitcoin and remove the 'scary technological hurdles and requirements' or the huge amount of assumed technical jargon / understanding that the average Joe needs to know in order to get involved with bitcoin and use it in their daily life?||So first off we're here on Reddit, taking about bitcoin – we've learned about bitcoin and been in bitcoin for three years and I can tell you initially it's a lot to wrap your head around, but we've been working hard building Gemini and also we're working on our ETF that will trade under the ticker 'coin' – and so both should be friendly ways to get either bitcoin exposure or actually buy and sell bitcoin. We're trying to make very regulated, safe and secure environments for people to enter into the bitcoin ecosystem so that's what we've been putting our time towards.|
|What is in the immediate future for Bitcoin?||I think that the immediate future for bitcoin (at least in the U.S.) is regulated businesses – licensed businesses, like Gemini. It's impossible to totally see the future but if you look back to the early days of the Internet, I feel like we're in the first or second inning of bitcoin so it's almost like 1993 or 1994 so there is tremendous potential and we think it's just the beginning.|
|What is the Gemini use case for the regular Joe trying to diversify his assets?||Where Gemini comes into play is that we're New York-headquartered, U.S.-based, U.S. regulated and licensed platform to buy bitcoin. So if you make the decision to take the plunge and actually bitcoin for your portfolio and you think it's a good financial investment, then Gemini is a safe and secure home and platform to actually go and execute and buy bitcoin.|
|What's the latest on the ETF?||Unfortunately the ETF regulatory process is a close process and we're not allowed to discuss the latest and greatest with it. We are working incredibly hard to make this happen as quickly as possible, and rest assured that nobody wants this to come to market quicker than myself and u/winky_pop.|
|When either twin owes for lunch do you use Bitcoin?||So I don't usually buy my lunch with bitcoin because I'm worried that I'll be overpaying down the road so right now I'm holding my bitcoin.|
|Are you actually going to answer any questions?||Hey Jim, I think so. Yeah, why not. Here's you're answer.|
|of all, great site design. It was super easy to sign up, and everything seemed to work well. The only.||We're definitely looking at expanding the exchange offering but we want to stay super focused on first things first – and that was getting licensed in the state of New York and having a successful launch but suffice to say we are working hard to expand our airs of operation.|
|These are the things, in my opinion, that will make or break the exchange. There is a lot of demand for a.|
|Is gemini currently a spot market only exchange? What is the plan to bring initial liquidity to the exchange? Do you expect institutional investors to bring a large influx of new money into the bitcoin market? What other cryptocurrencies would you like to see traded on the exchange? Fully regulated and compliant US based exchange that can do everything, a one stop shop if you will. There is. Final question: What makes your exchange different than all the other ones, and why should we trade on it?||(5) We have institutional market makers who are going to be providing liquidity on the exchange and we have a lot of demand from just retail and individuals and also other institutions who want to buy and sell bitcoin, so we think the combination of all the customers and also institutional market makers will make a lively and liquid market.|
|I always have Tyler by me lunch.||That's not true.|
Earlier in March, the SEC had rejected the bitcoin ETF proposals by Winklevoss twins and SolidX Management. The third one proposed by Grayscale's Bitcoin Investment Trust (GBTC) is being reviewed. The Securities and Exchange Commission rejected a second attempt by Cameron and Tyler Winklevoss, founders of crypto exchange Gemini, to list shares of what would be the first-ever bitcoin ETF. If the Winklevoss twins' Bitcoin ETF dream is dead, or at least in regulatory limbo, there is an alternative path for the Winklevosses to explore in the form of a bitcoin exchange-traded note, or ETN. A blockchain startup based in Sweden, has signed a software license agreement with a local bank to deliver a crypto fund trading service. The Winklevoss Bitcoin Trust has spent almost exactly one year slogging through the Securities and Exchange Commission (SEC) approval system, with multiple amendments to their filing along the way. In their most recent filing, the Winklevoss twins updated their plans for their bitcoin-backed exchange-traded fund (ETF) with what the Wall Street Journal deemed “minor tweaks” …
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