Winklevoss twins plan regulated Bitcoin exchange

Cameron and Tyler Winklevoss want their "next-generation exchange," to be based in New York, to be fully regulated and in compliance with financial laws, a stance that goes against the anonymous, anti-establishment philosophy under which Bitcoin was born six years ago.

As major investors in Bitcoin, the brothers see the exchange as a way to secure the digital currency's future amid continued price declines, hacking incidents and criminal cases. To bolster confidence, they said they have formed a relationship with a chartered bank in the state of New York.

"This means that your money will never leave the country," the twins wrote in a blog post. "It also means that U.S. dollars on Gemini will be eligible for FDIC insurance and held by a U.S.-regulated bank," they wrote, referring to the U.S. Federal Deposit Insurance Corporation, which guarantees the deposits in member banks.

The team behind Gemini currently consists of 14 people including the brothers. They did not say when Gemini might receive regulatory approval from New York state authorities, who held public hearings on regulations a year ago.

"It's true that Bitcoin's promise is a new, frictionless money, but that all becomes academic if we don't build towards an ecosystem that is free of hacking, fraud and security breaches," the twins wrote on their Gemini blog.

The so-called Winklevii are believed to be one of the largest holders of Bitcoin in the world. They're also known for their disputes with Facebook CEO Mark Zuckerberg as well as for another cryptocurrency plan -- a NASDAQ Bitcoin investment trust under which the coins would apparently be protected in vaults like gold bars.

Tim Hornyak covers Japan and emerging technologies for The IDG News Service. Follow Tim on Twitter at @robotopia.