October 5, 2015 / 4:49 PM / 3 years ago

UPDATE 1-New York regulator issues license to Winkelvoss bitcoin venture

(Adds name, details of the bank in 11th paragraph)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 5 (Reuters) - Gemini Trust Company, founded by investors Tyler and Cameron Winklevoss, has been granted a license to operate as a chartered limited liability trust company by the New York State Department of Financial Services, the state regulator announced on Monday.

Under the charter, Gemini will operate a bitcoin exchange and will officially open for trading on Thursday at 9:30 a.m. (1330 GMT), serving both individual and institutional customers, Gemini said in a separate statement on Monday.

Bitcoin is a virtual currency bought and sold on a peer-to-peer network independent of central control.

“In New York, we are continuing to move forward on licensing and chartering virtual currency firms,” said Anthony J. Albanese, acting superintendent of Financial Services. “Smart, targeted regulation that helps protect consumers and prevent illicit activity is vital to the long-term future of this industry.”

Gemini is the first licensed cryptocurrency business for the Winklevoss brothers, best known for accusing Facebook Inc founder Mark Zuckerberg of stealing their idea.

“Our focus right now is operating a spot bitcoin exchange. In many ways, we’re not really re-inventing the wheel,” Gemini Chief Executive Tyler Winklevoss told Reuters in August.

The Winklevoss brothers filed an application to operate as a trust company with the New York’s banking regulator in July.

A trust company is a type of financial institution technically different from a bank, analysts said. Under New York banking law, a trust company has all the powers of a bank to take deposits and make loans, alongside certain fiduciary powers such as acting as an agent for government bodies.

As a limited liability trust company, Gemini will maintain significant capital reserves consistent with that of a premier fiduciary business, the company said.

Gemini added that it will hold in custody all bitcoin deposits, the majority of which will be held in its offline, multi-signature, geographically distributed cold storage system.

Gemini said all fiat currency such as U.S. dollars transferred to Gemini will be deposited at New York-based Signature Bank, headquartered in Manhattan. The deposits will be eligible for Federal Deposit Insurance Corp insurance, subject to applicable limitations.

Signature Bank is a full-service commercial bank serving privately-owned businesses, particularly those which often fund themselves and are underserved by larger financial institutions. The bank is listed on NASDAQ.

Bitcoin’s value has been highly volatile, having peaked at over $1,200 in late 2013 before crashing after the collapse of the Mt. Gox bitcoin exchange. One bitcoin is currently worth around $238.17 on the BitStamp platform. (Reporting by Gertrude Chavez-Dreyfuss; Editing by W Simon and Alan Crosby)

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