Bitcoin In The Big Apple: SecondMarket Preparing To Open First New York City-based Bitcoin Exchange

In the wake of the Mt. Gox controversy, a new bitcoin exchange is preparing to open operations in New York City, making it the first bitcoin exchange in the Big Apple.

SecondMarket, a New York City-based digital marketplace that allows customers to buy and sell illiquid assets, is expanding its bitcoin operations into an entire bitcoin exchange. According to Fortune, SecondMarket has all of its plans ready and is simply waiting for formal approval from the company’s board at the next monthly meeting.

SecondMarket currently acts as the custodian of the Bitcoin Investment Trust: a private, open-ended trust audited by Ernst & Young that derives value from the price of bitcoin. BIT is the first-ever U.S. investment vehicle dedicated exclusively to bitcoin, and it will be placed in charge of the new bitcoin exchange.

SecondMarket will also turn its 11-person bitcoin trading team into a full trading desk to fill both sides of the currency exchange after the closing of Mt. Gox. SecondMarket will also contribute about $20 million in cash and bitcoin to get the bitcoin exchange off the ground.

The new bitcoin exchange will be modeled on the early days of The IntercontinentalExchange and will rely on daily spot pricing to bring consistency to bitcoin’s value. Wall Street banks and bitcoin start-ups will all be members of the bitcoin exchange, and the exchange will also act as a clearing house for their transactions at the end of the day. The members will also be able to keep cash in bitcoin through the exchange.

Individuals will not be able to trade on the New York bitcoin exchange, but they may be allowed to do business with the member firms.

Barry Silbert, the chief executive officer of SecondMarket, will serve as CEO of the new bitcoin exchange. SecondMarket is hoping that its new business can become the trusted bitcoin exchange that Mt. Gox failed to be.