Winklevoss Capital, the firm run by Cameron and Tyler Winklevoss, expects to get regulatory approval to launch a US exchange for investors to buy and sell the virtual currency Bitcoin in the first quarter, the twins told Reuters yesterday.
"The information coming out of the Department of Financial Services (DFS) 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.
Any firm seeking to launch a financial exchange needs the approval of the state it wants to operate in.
The twins want to launch a regulated US 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 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 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 organisation."
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% on the day.
"We have never sold a Bitcoin," Cameron Winklevoss said.
Bitcoin exchange debut
Meanwhile, Bitcoin payments processor Coinbase yesterday opened a regulated exchange in the US for trading the virtual currency, the company said.
Launched just days after Coinbase raised $75 million from blue-chip financial institutions such as the New York Stock Exchange, the Coinbase Exchange was meant to help stabilise the Bitcoin network, which has no central regulator or overseer, the company said.
Coinbase users in 24 states and US territories can immediately trade on the exchange, which will charge no fees through 30 March, according to a blog post by the San Francisco-based company.
Details of the new exchange's volumes were not immediately available. The value of highly volatile Bitcoin was up 5.2% on Monday afternoon at $265.49, according to Thomson Reuters data.
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