In early 2019, Gemini’s Winklevoss twins won the streets and the newspapers of New York city. With the slogan “Revolution needs rules,” the exchange announced that it was fully regulated, in compliance with NY state legislation, one of the most restrictive in the country. In general, the arrival of Gemini had a very positive impact on digital media and the traditional press.
With Gemini’s move toward regulation, the market interpreted that the company wanted not only to have a competitive advantage but also sent a signal to the other participants that the digital assets are arriving at a point of operational and managerial maturity that mades feasible the arrival of the institutional capital to the crypto-coins. Therefore, this part of the community sees this as the beginning of the arrival of the crypto-coins to the mainstream.
The feeling is reinforced by the company itself. In an interview, Gemini Compliance director Yusuf Hussain said that in face of the challenges the crypto industry has undergone and is going through, it is important to show maturity in the issue of digital asset security. “Having a SOC 2 certificate from a third party like Deloitte shows that we are holding on to high standards,” he said. The company is the first in this market to have this certificate.
In fact, the security issue has been a challenge in the crypto market. Many companies have shown they are not prepared to meet this challenge. Thus, they caused losses to their clients and ended up impacting, albeit minimally, the credibility of this market. However, the share of exchanges and ICOs where this occurred is small compared to the size of the market.
Another consequence that can come from the arrival of Gemini to the mainstream is the attempt of the competitors to run after the loss. Thus, it is possible that we will see in the short and medium term other exchanges trying to conform to the traditional legislation. However, adjusting to the rules requires high investments and waiting time. Some bitlicenses, as licenses given by the regulator are called, can take up to two years to be issued. So far, there are an estimated 13 licenses issued.
For the CEO of Transfero Swiss AG, Thiago César, Gemini’s movement has two different interpretations. One is that the crypto-coins are, in fact, reaching a level of maturity that will allow institutional money to go into that market. The other is that the company, by openly supporting the restrictive regulation of NY, is agreeing that the entry of new players in that market must have strong barriers. “This may hinder the rapid development of this market. This is the classic case of oligopoly fostered by the regulator. That is, the state choosing the winners and losers. Let’s observe the scope of the regulatory umbrella in the behavior of the company in the coming months, “says the executive.