The Winklevoss Twins Look to Open the Winklevoss Bitcoin Trust
Over the last several months, Bitcoins have become some kind of alternative cyber currency that seems to exist outside the realm of governments and their central banks. The virtual currency has come under the scrutiny of governments and their regulatory bodies. Bitcoin traders like Mt. Gox have had accounts seized and Liberty Reserves was shut down due to money laundering and other illicit and criminal behavior.
So what is next? How else can this virtual currency make news?
Enter the Winklevoss twins, also known as Winklevii.
Cameron and Tyler Winklevoss (Winklevii), best known for their history with Facebook, have filed papers with securities regulators. They wish to allow investors to trade the virtual currency like they would trade other securities like stocks, bonds and commodities. Their grand plan calls for what is called an exchange traded fund, that normally would track a basket of stocks or a commodity, be used to hold Bitcoins.
This could be part of a much broader campaign to remove the stigma surrounding this volatile virtual currency which as we know has found itself inundated with regulatory questions as well as concerns regarding market manipulation, please see below chart. Recently, Mt. Gox filed papers with the U.S. Treasury to become a registered money services business, making the company compliant with U.S. money- laundering laws.
This is rather an audacious and adventurous undertaking for them. Albeit, Winklevii already have sizeable holdings in Bitcoin, this move, the new Winklevoss Bitcoin Trust, could send Bitcoin from entrepreneurs like themselves to retail investors… anyone with a brokerage account. “The trust brings Bitcoin to Main Street and mainstream investors to Bitcoin,” said Tyler Winklevoss, co-founder of Math-Based Asset Services, which would operate the proposed fund. “It eliminates the friction of buying and reduces the risks associated with storing Bitcoin while offering similar investment attributes to direct ownership.”
It is safe to say that this new adventure is a long shot right now. They are going along a smart route by bringing in the person who created the first exchange traded fund for gold and silver backed E.T.F.’s, Kathleen Moriarty of Katten Muchin, but it is far from certain that regulators will be sold on this idea. Even if they are, there are major challenges they will face. Such as current rules and regulations already in place that stop the virtual currency from being bought and sold with ease.
Bitcoins has yet to prove itself as a viable and stable monetary platform. Even though it has been picked up by PayPal who want to offer Bitcoins as another payment form, it is still quite volatile. However, online traders like Mt. Gox, IG and now Winklevii are hoping this volatility translates into real money as they roll out investment products like binary bets to a new, possible exchange traded fund.
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