Winklevoss Brothers Choose State Street to Help Launch Bitcoin ETF

By Paul Vigna

Entrepreneurs Cameron and Tyler Winklevoss chose State Street Corp. to help them launch a new exchange-traded fund based on the virtual currency bitcoin, according to a regulatory filing Tuesday.

The twin brothers are hoping the Securities and Exchange Commission approves their new fund, the Winklevoss Bitcoin Trust, after a process that has already gone on for more than three years. In its latest filing, a seventh amendment to its original filing, the brothers said State Street, based in Boston, would serve as transfer agent, while San Francisco-based Burr Pilger Mayer will act as auditor.

The transfer agent acts as a fund’s administrator, responsible for recording ownership changes, calculating the daily net asset value, and maintaining records.

Burr Pilger Mayer, meanwhile, will conduct monthly “proof of control” exercises, essentially an audit to show that all the bitcoin reported as being held by the fund are legitimate. The exercise will be carried out by Gemini, the Winklevoss’s exchange and trust company that will act as the ETF’s custodian, and results will be verified by Burr Pilger Mayer.

Bitcoin is a digital currency that isn’t backed by any government or private entity. It was launched in 2009 by an anonymous person calling himself Satoshi Nakamoto.

The price of bitcoin in its earlier days was wildly erratic, and indeed is still volatile. However, since a spike in late 2013 and crash in early 2014, it has been more stable. This year, it has generally been rising, and is up about 48%, trading recently at $635.

An SEC-approved ETF could attract more mainstream investors to the asset, but that isn’t a sure thing and it is unclear how the SEC will rule. There has been a fairly competitive race to get a bitcoin ETF out to the investing public, and it is seen as a key conduit for the digital currency to gain exposure to more mainstream investors.

There is already a bitcoin ETF on the market, the Bitcoin Investment Trust from Barry Silbert’s Grayscale Investments. It trades over the counter and hasn’t been approved by the SEC. In addition, another offering from a firm called SolidX is awaiting SEC approval.

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