Today, SecondMarket has revealed their "Experienced, Full Service Bitcoin Trading Services" via a newly released webpage. SecondMarket has launched their first step towards America's first fully regulated Bitcoin Exchange. Buyers and sellers now have a fully compliant source of Bitcoin trading from the fabled NYC. SecondMarket is licensed to do its business in all 50 states, as well as with the SEC and FINRA. The Bitcoin Exchange Services provided by SecondMarket are simple: Buying and Selling of BTC with a 25 BTC minimum.
As PJ wrote days ago, Wall Street is coming onboard. Wherever Wall Street takes an interest in the financial realm, the rest of the world soon follows. This happens for better, in the case of SecondMarket's Bitcoin offerings, and for worse, in the case of mortgage backed securities and the 2008 financial crisis.
Over the last few months, SecondMarket's Barry Silbert has been seeking the regulatory and financial backing to create America's first fully licensed Bitcoin exchange. Barry told Reuters that SecondMarket would be creating a fully regulated Bitcoin Exchange on American soil by summer of 2014. Today, SecondMarket has put their 3 month old market making services (Bitcoin Exchange Services) online.
FYI, we did NOT launch a digital currency exchange today. Just added a new web page for our bitcoin "market making"https://t.co/PoeNmfN2ZS
— Barry Silbert (@barrysilbert) April 16, 2014
Barry Silbert has taken to Twitter to clarify that this is not the promised Bitcoin Exchange that will be open to all compliant users, without a 25 BTC minimum.
How To Buy Or Sell Bitcoin With SecondMarket
SecondMarket claims that users will be able to settle a transaction of as little as 25 Bitcoins in as little as one business day. Before you can buy or sell Bitcoins to SecondMarket, you will have to fill out a new account profile (NAP) form. Because SecondMarket is a registered broker-dealer regulated by the SEC and FINRA, they must follow every AML and KYC regulation.
After passing the compliance steps, you will be contacted by a SecondMarket representative. You would then proceed to negotiate a fair market-valued price for the transaction to be completed.
After a successful negotiation, sellers would send their Bitcoins to a SecondMarket Bitcoin address. Following six confirmations by the Bitcoin network, SecondMarket will wire the promised USD amount to the seller's bank account. Buyers, on the other hand, would send funds, via wire, to SecondMarket along with a Bitcoin address. SecondMarket would then send the Bitcoins to the provided address.
How Is This Different Than The Bitcoin Investment Trust?
SecondMarket launched their Bitcoin Investment Trust (BIT) last September. Barry Silbert was able to avoid the lengthy SEC pre-approval process by promising to publicly list all trades after a 12 month period. For the BIT, investors need to be licensed and make over $200,000 annually. Second Market denominates its funds and shares in US dollars and claims to have relationships with “over a hundred players in the Bitcoin space” to supply the Bitcoin to the trust, according to the Wall Street Journal. In this way, Second Market avoids exchanges altogether.
We can see now that SecondMarket's new Bitcoin market making will provide SecondMarket with more Bitcoins to be used in the BIT, as well as with selling. Compared with the classic Bitcoin exchange with APIs and live orders that we are familiar with, SecondMarket's exchange is manually operated and should not be used for day trading. Instead, SecondMarket provides liquidity to larger players (25 BTC minimum) in the area that wish to enter and leave the Bitcoin market at will. This is a gigantic step forward for Bitcoin's legitimacy.