Bitcoin will have a U.S.-based regulated exchange for bitcoin crypto-currency investors this summer under SecondMarkets Holdings, CEO Barry Silbert, according to breaking news this afternoon from Reuters.
Silbert said the new exchange will be modeled after the New York Stock Exchange, and would be launched possibly in the summer of 2014. He plans to bring in board at least 10 members by the end of March plus other bitcoin holding companies and at least a half of dozen global banks.
Because of the extreme volatility in the market place due to criminal activity and technical issues, Silbert explains that including the banks in a regulatory format will help provide sound business practices,
‘The whole effort will be regulated and all the participants in the exchange will be regulated as well,’ Silbert said.
He plans this new exchange to be part of SecondMarket as a spin off to oversee all the firm's bitcoin crypto currency activities. A subsidiary of SecondMarket sponsors the Bitcoin Investment Trust, which has net assets of $47 million and a trading desk.
Silbert told CoinDesk that he plans to be CEO of the yet-to-be named exchange but it will include the Bitcoin Investment Trust, established by him for high wealth clients, and an 11-person trading desk to support this initial set-up.
According to Silbert the new Bitcoin exchange will have an immediate infusion of $20 million in cash and bitcoin currency. Silbert states that, ‘the company on day one will be well-capitalized; it will have two fast growing businesses.’
Transaction can be facilitated by 'members only' who will include CoinDesk and Circle (Jeremy Allaire). According to Silbert, ‘If you want to buy and sell bitcoin you have to go through one of the members, and the members are all going to be regulated businesses. They’ll be banks, they’ll be MSBs, they’ll be bitcoin companies, and they’ll be broker dealers. The idea is the other exchanges of the world could actually become members of the exchange.’
The new exchange will perform like a TD Ameritrade or Fidelity. The idea is based upon The Intercontinental Exchange Group (ICE). The ICE focus is on a global platform of commodities and financial products.
Due to the extreme volatility caused by the lack of regulation, the new exchange will use the gold market as a model and set the price twice a day. Silbert says that, ‘We’re going to attempt to slow things down a bit and create a true indication of bitcoin value, once or twice a day, and each of the members though they can trade all day long, or they can tie price to the spot price.’
Technically correct performing software and a self-regulatory organization (SRO) will provide that transaction clear the exchange and are correctly reported to the public ledger. This will avoid the problems of transaction malleability that has faced Mt.Gox and other exchanges these past several months.
Silbert told CoinDesk that this strategy is not hinged upon the problems of these past months but rather a ‘structural, branding initiative’, one that he saw as intrinsic given that SecondMarket’s core business, which extends beyond bitcoin trading and settlement, has its own customers and brand identity.
In response to the news of the last 48 hours regarding Mt.Gox shut down, Silbert states that, ‘We did accelerate the announcement with the intention to provide a counterbalance to the news so we could demonstrate to the press at least that there is an effort to fill the void of Gox.’
To find more information on Bitcoin and related news view th elist below in Author's suggestions and the video atop this article on the shutdown of Mt.Gox.
I am on Twitter Victoria Wagner@Victoriaross888