Winklevoss twins expect first quarter debut of bitcoin exchange
(Corrects Jan 26 story to clarify that the Winklevoss brothers, and not Winklevoss Capital, expect to get regulators’ nod, in para 1. Adds 3rd paragraph to include the name of the bitcoin exchange)
By Gertrude Chavez-Dreyfuss and Jessica Toonkel
HOLLYWOOD, Fla. (Reuters) - Cameron and Tyler Winklevoss, two of the leading advocates of bitcoin, expect to get regulatory approval to launch a U.S. exchange for investors to buy and sell the virtual currency in the first quarter, the twins told Reuters on Monday.
"The information coming out of the DFS (Department of Financial Services) is that Q1 is their goal. And we will be ready by then,” Cameron Winklevoss, a principal at New York-based Winklevoss Capital, said in an interview at ETF.com's Inside ETFs Conference in Hollywood, Florida.
The bitcoin exchange will be called Gemini, the brothers said. In a blog on its website, gemini.com, the Winklevoss twins said they have been putting together the Gemini team since last February.
Any firm seeking to launch a financial exchange needs the approval of the state it wants to operate in.
On Monday, Coinbase Inc launched the first regulated U.S. exchange for bitcoin.
The twins want to launch a regulated U.S. exchange because so many bitcoin exchanges are offshore and unregulated.
"With a bitcoin exchange you have to build it like you are a real financial institution," said Tyler Winklevoss.
The Winklevoss twins are creating the exchange while they seek approval from the Securities and Exchange Commission to launch a bitcoin exchange-traded fund. The agency has been reviewing their filing since 2013.
The twins anticipate that institutional investors, like mutual funds and pension plans, will be interested in a bitcoin ETF since they are not permitted to buy the currency itself.
They also believe mom and pop investors who do not want to store a large amount of bitcoin would be interested in the ETF.
"Most bitcoin losses have not been due to theft or hacking," Tyler Winklevoss said. "It has been due to user error. It is people forgetting their passwords or losing their keys."
Still the twins noted that security is a big issue for bitcoin, as a few exchanges have been hacked over the years.
Some of the firm's first hires for its exchange were security professionals. And they insist that security at exchanges has gotten much better over time.
“Security shouldn’t be with this guy in the back office,” said Cameron Winklevoss. “He should be the most important person in the organization.”
Despite bitcoin's huge drop since its high of $1,163 in December 2013, the Winklevoss brothers still think the currency will hit $40,000 per unit in the future.
On Monday, bitcoin traded at $274.39, up 7.47 percent on the day.
"We have never sold a bitcoin," Cameron Winklevoss said.
(Reporting by Gertrude Chavez-Dreyfuss and Jessica Toonkel; Editing by Phil Berlowitz)
