Gemini, a New York-based bitcoin exchange being developed by the Winklevoss twins of Facebook-fame, just received approval from the New York Department of Financial Services (NYDFS). Many investors had been waiting with bated breath for this announcement, following the implementation of New York’s BitLicense which has posed regulatory challenges for some cryptocurrency startups.
The agency granted approval for Gemini’s Articles of Organization and its application for exemption from the deposit insurance requirements of Section 32 of the Banking Law, based on the NYDFS Weekly Banking Bulletin for September 25, 2015. The filing was made in July this year, as the Winklevoss twins sought regulatory approval to operate as a trust company and have the bitcoin exchange offer services to individuals and institutions in the country.
Next Steps for the Gemini Bitcoin Exchange
With that, Gemini bitcoin exchange is now an established entity but this only marks the first among many steps before the company can start offering its services. As for the deposit insurance exemption, this means that Gemini will not be eligible for providing FDIC insurance on the accounts.
From here, Gemini will now work on securing subsequent licensing approvals from the agency before catering to US clients. The bitcoin exchange plans on operating exclusively in the US, working with US banks and guaranteeing that the funds never leave the country.
The company also ensures that it will be fully-compliant with federal and state regulations, as well as consumer protection laws. The Winklevoss twins are applying for a banking charter instead of just the NYDFS BitLicense, which they say doesn’t cover institutional clients.
Besides, banking charter restrictions on fiat lending don’t apply to bitcoin, which suggests that the bitcoin exchange can still be open to offering other products such as bitcoin derivatives and futures, which were ruled as commodities by the CFTC. Under New York state’s banking law, a trust company has all the powers of a bank to take deposits and make loans, aside from certain fiduciary powers such as acting as an agent for governmental bodies.