Winklevoss Twins' Bitcoin ETF Proposal Paved Way for 18% Price Drop and 11-Year Delay

The Mount Rushmore of Bitcoin is a metaphorical representation of the most influential figures in the cryptocurrency's history. While names like Hal Finney, Jack Dorsey, Adam Back, Tim Draper, and Ross Ulbricht are often mentioned, the Winklevoss twins, Tyler and Cameron, deserve a place on this symbolic monument. Their contributions to the expansion and mainstream adoption of Bitcoin are significant and cannot be overlooked.

The real Mount Rushmore features four presidential heads, each representing a different era in American history: the founding, expansion, development, and preservation of the United States. In the Bitcoin version, the Winklevoss twins would best fit into the second slot, representing expansion. Their efforts to broaden Bitcoin’s influence through the first ETF proposal are a testament to their vision and dedication to the cryptocurrency.

Exactly 12 years ago, the Winklevoss brothers filed for the Winklevoss Bitcoin Trust, a first-of-its-kind exchange-traded fund sponsored by their firm, Math-Based Asset Services. The trust was backed by $20 million in bitcoin, which at the time was approximately 200,000 BTC. This bold move aimed to bring Bitcoin out of the obscure financial fringes of the internet and into everyday brokerage accounts, making it more accessible to a broader range of investors.

The Winklevoss Bitcoin Trust was designed to mirror SPDR Gold Shares, with in-kind redemption, fees paid in BTC, and private keys to the Trust’s coins held under physical custody in bank vaults. The bitcoins were initially managed by a unit of Delaware Trust Company before the Winklevoss’ own Gemini was named in later filings. The proposal was a groundbreaking attempt to integrate Bitcoin into traditional financial systems, offering investors a cost-effective and convenient means to gain exposure to the cryptocurrency with minimal credit risk.

However, the SEC took four years to formally reject the Winklevoss proposal, citing the need for surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. This move initially sank the price of Bitcoin by 18%, but it quickly recovered. Bitcoin-backed ETFs would only arrive on US exchanges seven years later, in January 2024, almost eleven years after the original Winklevoss proposal. Despite the delay, the Winklevoss brothers' efforts laid the groundwork for future Bitcoin ETFs and brought the cryptocurrency closer to mainstream adoption.

Although the Winklevoss brothers never ended up launching their own ETF, their contributions to the Bitcoin ecosystem are undeniable. Gemini, their cryptocurrency exchange, is now the custodian for VanEck’s bitcoin ETF, HODL, and has recently confidentially filed for an IPO. These developments highlight the Winklevoss twins' continued influence and commitment to the growth of Bitcoin and the broader cryptocurrency market.

In conclusion, the Winklevoss twins' pioneering efforts in proposing the first Bitcoin ETF and their ongoing contributions through Gemini make them worthy candidates for Bitcoin’s Mount Rushmore. Their vision and dedication to expanding Bitcoin’s influence have played a crucial role in bringing the cryptocurrency closer to mainstream adoption and recognition.