By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - New York state has approved the application of Gemini Trust Company, founded by investors Tyler and Cameron Winklevoss, to trade digital currency ether on its bitcoin exchange, Governor Andrew Cuomo announced on Thursday.
Ether, an alternative currency that differs from bitcoin, is a token or digital asset of the Ethereum platform, a blockchain, or public ledger of all ether transactions. The platform uses ether to execute peer-to-peer contracts automatically without the need for intermediaries. The currency is often used by software developers.
"With robust regulatory oversight, we are maintaining our status at the forefront of this technological revolution and ensuring that users have a safe and secure experience," Cuomo said in a statement.
The approval by the New York State Department of Financial Services marks the state's first consent for a digital currency-related service beyond bitcoin.
Trading on ether will begin on Monday, May 9, said Cameron Winklevoss, Gemini's co-founder and president, in an interview with Reuters. Customers will be able to store their ether from Thursday until it starts trading on the exchange on Monday.
Winklevoss also said the brothers' investment firm Winklevoss Capital is a "significant" holder of ether.
"We started buying ether at the beginning of the year," Winklevoss said. "Ethereum Foundation has a set number of ether that they have set aside over a period of time..(and) the proceeds from that go to the funding of the foundation and the developers to further the protocol."
The Winklevoss twins chose ether to trade on their exchange because of its "unique capabilities" that are different from bitcoin.
"There is a place for ether on our platform. It does what bitcoin doesn't do," Winklevoss said. "So that is the sort of criteria: that it is different enough from bitcoin and the proposition is great enough that this makes sense for us to include it in our platform."
According to coinmarketcap.com, ether is trading at $9.97 on late Thursday, with a market capitalization of about $795 million, the second largest behind bitcoin. Bitcoin currently has a market cap of $6.9 billion. Daily volume for ether is around $20 million.
Ether trades on other exchanges as well, but Winklevoss said those exchanges are unregulated or unlicensed.
"It's pretty clear that in the U.S. if you're an exchange, you are required at the minimum a money transmission license in each state," Winklevoss said. "Anybody who's operating an ether exchange doesn't have a license and is on borrowed time."
Demand for ether has steadily increased since its launch last year.
"Most of the people who work on ether right now are (software) developers developing applications for smart contracts on Ethereum and you need ether to do that," Winklevoss said.
Aside from developers, British pop artist Imogen Heap has put her music on the Ethereum platform. "She (Heap) created smart contracts on Ethereum whereby if you send enough ether to the address on the contracts, you can download her songs," Winklevoss said.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio and Andrew Hay)