Silbert took to Twitter today to announce that his alternative investment company is now buying bitcoins from interested sellers, then told CoinDesk this could mark a move into the US exchange market. He said:
“There is a clear need for a US-based, regulated, compliant and trustworthy bitcoin exchange. This could be the first step in that direction.”The announcement follows Mt. Gox’s decision to halt all bitcoin withdrawals from its service one day earlier. The surprise move sent bitcoin markets into decline in the hours that followed, and caused uncertainty to spread throughout the bitcoin community.
Silbert’s took to Twitter to announce his company’s new move, but did not mention the big-picture implications of the service.
Expanding activities
Founded
in 2004, SecondMarket offers a number services in addition to its most
high-profile offering, the Bitcoin Investment Trust launched last September. To date, the private trust has raised approximately 80,000 BTC in holdings for its target investors, which primarily include high-earning Wall Street professionals and tech entrepreneurs.
“Expanding
these activities is a pilot intended to determine what buyer and seller
demand exists beyond our current activities in support of the Bitcoin
Investment Trust,” Silbert said.
If Silbert’s own
estimates are accurate, the company is growing fast. Speaking at the
Disruptive Technologies Speaker Series earlier this week, Silbert
indicated that the Bitcoin Investment Trust had raised 70,000 BTC.
As for the transaction minimum of 25 BTC (roughly $18,000 at press time), Silbert said that the decision was a practical matter.
“Our
market making, in its current form [and] structure, is high touch, and
facilitating a large number of small transactions would not be
feasible,” he noted.
Timing the decision
While Silbert did suggest that the news from Mt. Gox provided additional value to his company’s newest offering, the move to begin openly working with sellers did not happen overnight. Silbert noted that his team has been sourcing bitcoin on and off exchanges since last year, but that additional services like this might be needed to meet demand.Silbert, who spoke on day one of last week’s NYDFS hearings and recently made Forbes’ 40 Under Forty class of 2013, has been vocal about his belief that “2014 will be the year of bitcoin on Wall Street”.
The investor says that this new pilot service is meant to help SecondMarket grow as it furthers its base of Wall Street and institutional investors, who he expects will soon be moving into the asset class with more frequency.
How SecondMarket selling works
To begin selling bitcoins to SecondMarket, sellers will need to first fill out a New Account Profile (NAP) form. This NAP form asks basic questions such as the name and address of the individual, and source of the funds.
Those representing entities will need to complete a separate, lengthier NAP form. From there, the transaction takes an additional five steps to complete.
- SecondMarket notifies the seller of the trade approval
- The seller engages in an offline, privately held negotiation to determine the sale price
- The seller sends the bitcoins to SecondMarket
- After six confirmations via the block chain, funds are sent to the seller
- The seller is provided a FED reference number for tracking.
Image credit: Buying and selling dice via Shutterstock
