The Winklevosses have launched their bitcoin exchange in the UK
Gemini, one of the world’s largest cryptocurrency exchanges, has launched in the UK and plans to cash in on the boom in lockdown bitcoin investments. Plans to grow the company’s operations have moved forward despite the exit of European head Julian Sawyer, who joined the company from his role as co-founder of Starling Bank in December 2019.
The New York-headquartered exchange was founded by the Winklevoss twins, best-known for their legal dispute with Facebook founder Mark Zuckerberg that was dramatised in the film The Social Network. Tyler and Cameron Winklevoss invested part of their $65 million Facebook settlement into bitcoin (at one point they owned one per cent of the currency), and when its value rose sharply in 2017 they became billionaires.
The exchange has already filed for a licence to operate in Ireland, which will be used as backup if Brexit does not allow it to operate in Europe. The twins have also touted setting up an engineering outpost in the UK.
Gemini’s UK launch comes as bitcoin’s rate fluctuates at around $10,000, half of what it was at its height in 2017. The currency was buoyed by investors during the pandemic this summer, reaching above $12,000 in August and trebling in value since March. However, Tyler Winklevoss claims that the interest in crypto is higher than ever. The pandemic caused “dyed in the wool Wall Streeters that would be the greatest sceptics you could imagine of bitcoin and cryptocurrency” to take a position in bitcoin because “they’re really worried about the prospects of what the money printing means for the US dollar”, he says.
He argues that the idea of earning interest on your money at your bank is no longer possible, and may not be for many years. “Bitcoin has a fixed supply, it’s very much like gold, but actually, we believe it’s gold 2.0 and it provides an opportunity to hedge itself against oncoming inflation,” he explains. Tyler Winklevoss has previously predicted that bitcoin could overtake gold as the world’s largest safe-haven asset.
The idea that bitcoin was completely uncorrelated with the rest of the market and could potentially act as a safe haven during times of economic turmoil gained popularity in 2019. But experts have questioned this approach, claiming that bitcoin is a hedge against inflation and loss of confidence in fiat currencies (such as the pound, the dollar or the Euro), not a hedge against a typical recession.
But Winklevoss believes that people’s interest in investing in cryptocurrency, which was buoyed by individuals during the pandemic, will continue. “This is far from a flash in the pan, there’s been a lot of staying power for bitcoin,” he says. “You’re comparing a zero negative interest rate, basically a completely stagnant situation on one hand, to a gold rush on the other hand. That’s not hypothetical, it’s actually happening right now.”
Gemini’s ambitions have been hampered by regulators’ skepticism that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses. In 2018, bitcoin fell after the Securities and Exchange Commission rejected a request to list Gemini, saying that it was not convinced that the currency has adequate surveillance to protect it against market manipulation. Another crypto trader, Wilshire Phoenix, was rejected on the same grounds earlier this year.
In the UK, it was the second cryptocurrency exchange to be added to the Financial Conduct Authority’s register, a requirement of new anti-money laundering measures to better control the activity in the sector. It has been granted an Electronic Money Institution license by the FCA, allowing it to offer cryptocurrency exchanges and custody services to individuals and institutions.
Gemini has made a string of high-profile hires over the past 18 months to expand its exchange and custody business, however, bringing in executives from the New York Stock Exchange and the International Securities Exchange.
Sawyer had been hired to spearhead the company’s efforts to expand outside America. Following his exit, Gemini’s European expansion is now being led by head of international business Michael Breu, and chief compliance officer for Europe Blair Halliday, alongside management from the US.
Natasha Bernal is WIRED’s business editor. She tweets from @TashaBernal