It has been a rough year for bitcoin so far, and we are less than 30 days in. While the founder of the Silk Road sits on trial and many wonder if there is a legal application for bitcoin as a currency, the price per unit has been falling sharply for three months and miners can’t afford to stay in business.
Out of this chaos ride two possible heros to save the day: Cameron and Tyler Winklevoss. The tech enthused twins are trying to build the first regulated Bitcoin exchange for American customers — what they are calling the Nasdaq of Bitcoin.
To purse that goal, the brothers have hired hedge fund engineers and sought regulatorss input so that their exchange can launch in the coming months.
The exchange is to be called Gemini – of course – and will be financed by the Winklevii, a risky bet given the virtual currency’s difficult year and incumbent security risks.
“Right now we have to build the infrastructure,” Tyler Winklevoss said to The New York Times. “You have to walk before you run.”
The twins further noted that the crash of Mt. Gox, the Silk Road trial and the newly announced Bitstamp hack have done anything to make them doubt the promise of the technology — they say they continue to hold every Bitcoin they ever purchased — and underscores why a reliable, regulated exchange is needed.
“The A Team wasn’t there,” Tyler Winklevoss said. “There was a problem here and it needs to be solved.”
The Gemini staff is working at a few rows of desks in the Winklevoss Capital offices near Madison Square Park in Manhattan; they have dry-erase boards on the walls covered in math equations and strategic scribbles as well as the requisite bean bag chair.
Michael Breu, the firms compliance officer, was previously at Bridgewater Associates, where he was head of information security in the research department. At Gemini, Mr. Breu works closely with Cem Paya, the head of security who comes to Gemini courtesy of Airbnb.
The twins have brought on a leading law firm on financial regulations, Katten Muchin Rosenman, to help win regulatory approval.
Their close cooperation with regulators has also helped them win the thing that has proved the most elusive for Bitcoin companies: a bank account with an American bank. According to documents viewed by The New York Times (on condition that only their general outline be described), the Winklevosses have an agreement with a bank chartered in New York to handle the dollars moving in and out of customer accounts.
Cooperation with regulators has divided the virtual currency world. Bitcoin was founded, in part, with the intention of creating a currency outside the control of governments. The twins have placed themselves firmly in the camp of those who believe that Bitcoin will survive only if it has regulatory oversight.
“Our philosophy is to ask for permission, not forgiveness,” Cameron Winklevoss said.