First reported by Fortune, SecondMarket is in the late stages of launching a standalone bitcoin entity which will include exchange services. The operator of an online marketplace for privately owned shares, SecondMarket has been an active in the bitcoin sector with the launch of education portal in July 2013 followed by the creation of the Bitcoin Investment Trust (BIT) for accredited investors. The launch of a bitcoin exchange for SecondMarket is not surprising, as the company’s CEO, Barry Silbert hinted to one when they announced a pilot bitcoin buying market earlier this month.
Speaking publicly about the coming exchange on CNBC yesterday, Silbert expressed that “I don’t want to speculate on the rumors about MtGox, but I think it does highlight the need for a well- run regulated exchange and that’s what we want to focus on. “ He added that his opinion was that regulators are realizing that “digital currency isn’t going away”, thereby leading to support from them to create guidelines to govern the new currencies.
When questions about security, Silbert responded to CNBC that “you have to remember that bitcoin is very early.. and you have some early players that get involved that don’t take the correct precautions” but he added that we now have larger investors and the “who’s who of venture money building the next group of (bitcoin) companies”.
Silbert himself is also an active investor in funding new bitcoin companies via his Bitcoin Oppurtunity Fund, and bullish on the long terms prospects of the digital currency. In a separate interview with CBC News, Silbert stated that “I believe that bitcoin is as big as the internet ; changing the way people think about money, changing the way people send money, spend money, is as big as the internet.”
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Among companies invested in by the Bitcoin Opportunity Fund includes Singapore based itBit, an exchange themselves. Launched in 2013, itBit forged relationships with banks partners and regulators before launching their exchange live; fitting the niche of Silbert’s statement of a need for “well-run regulated exchanges”.
Commenting to DC Magnates about the process to create banking relationships before launching, Antony Lewis, Business Development at itBit, stated that “We took about 4 months to build our first banking relationship, which included several rounds of presentations and explanations about our business and capital position.” Lewis added that “Having a good banking relationship is critical for Exchanges as well as clients. Clients need to trust that their assets will not be frozen at a moment’s notice.”
Speaking about regulation, Lewis echoed similar beliefs to Silbert as he mentioned “Relationships with regulators will be key. Right now we are finding that Bitcoin is a trending topic, so regulators are happy to learn more from Bitcoin operators.”
In terms of SecondMarket’s pending launch of an exchange, according to the Fortune report, the company will spin-off its bitcoin activities which currently include the BIT and trading desk, as well as contributing about $20 million in cash and bitcoins to the new endeavor. Using their existing trading desk which includes market making activities, a new exchange with an order book providing a two-sided marketplace will be created; expanding the existing pilot program which is only open to sellers. According to Fortune, the pending spin-off still require approval from SecondMarket board members.