According to a patent filing made public by the United States Patent and Trademark Office on May 8, 2017, Cameron and Tyler Winklevoss have won a patent for settling exchange-traded products (ETPs) with digital currencies, including bitcoin, ripple, dogecoin and ethereum.
ETPs are derivative-based investments that are traded on a securities exchange. An ETP is generally valued on the basis of a benchmark stock or commodity, which in the case of Winklevoss IP’s patent would be bitcoin or some other cryptocurrency. While derivative-based cryptocurrency investments already exist in the form of the bitcoin futures contract offered by CBOE and CME Group, no ETPs exist for the US cryptocurrency market yet.
The document reveals that the Winklevoss Twins first applied for the patent in December 2017 through their jointly-owned venture, Winklevoss IP.
The Winklevoss Twins are rather popular personalities in the digital currency community and are among the richest crypto holders worldwide, thanks to their multi-million dollar investment in bitcoin and related companies several years ago. In 2015, they founded the cryptocurrency exchange Gemini, that went on to become the “world’s first licensed ethereum exchange” in 2016.
The Winklevoss twins have thus far failed to secure SEC approval for a much-anticipated bitcoin ETF
The patent application is yet another attempt by the twins at bagging a cryptocurrency-based exchange traded product, with the first ETF proposal being turned down by the United States Securities and Exchange Commission back in March 2017.
Explaining the move, the SEC disclosed:
“The Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
Now that major investment companies, including Goldman Sachs, are rumored to bring bitcoin trading to Wall Street though, it is possible that the SEC will warm to the volatile asset class as it continues to mature. However, any attempt to introduce an ETF by the Winklevoss Twins will still have to be approved by the commission. So far, no company has managed to secure the right to offer a cryptocurrency-based ETF to investors.
Winklevoss IP, the company that was awarded the patent, has managed to secure five patents in the five months since the start of 2018. The previous patent, disclosed in mid April, aimed to improve security in cryptocurrency transactions using a number of common cryptographic techniques.