IIAwards - Review of Gemini

As part of the recently announced IIAwards, in which we celebrate innovations in the fintech and crypto industry, today we will analyze Gemini from different points of view.

Gemini Trust Company, LLC (Gemini) is a digital currency exchange and custodian that allows customers to buy, sell and store digital assets. It is a New York trust company that is regulated by the New York State Department of Financial Services (NYDFS) and was founded in 2014 by the famous Winklevoss twins. The Gemini App has slowly risen to become one of the most popular choices among cryptocurrency traders. In June 2016 Gemini became the world's first licensed ether exchange. In May 2018, it was announced that Gemini had become the world’s first licensed Zcash exchange. Currently, it operates in the United States, Canada, the United Kingdom, South Korea, Hong Kong and Singapore.

Gemini has a comparatively competitive fee structure. It has no deposit fees. However, wire transfers may be subject to fees from the bank that the money is sent from. In addition, users will have to pay a network fee for either Gemini Bitcoin or Gemini Ethereum deposits. This is the same as making any other transfer on either digital currency network, however. Gemini fees are a little different from those found at other digital asset exchange platforms. They depend on your 30-day trade volume. There are six tiers of fees. These range from light traders to those exchanging huge volumes of Bitcoin and Ether. Every day at midnight UTC, fees are recalculated for every trading pair.

The fees charged by this exchange are a bit more complex than other exchanges, as they consist of two parts. One part is the "Convenience Fee." In essence, this is a percentage of the purchased/sold amount. The Convenience Fee is what is closest to the normal trading fee charged at most other exchanges. The global industry average trading fee is around 0.10%-0.15% today (previously a bit higher, up to 0.25% as average). Gemini charges 0.50%, so it's a fair bit higher than industry average. In addition to the 0.50% trading fee, you also have to pay a transaction fee, which is a fixed USD-amount for smaller purchases. The USD-amount ranges from 0.99 USD to 2.99 USD for purchases between 0-200 USD. However, above that (for any purchases above 200 USD), you need to pay 1.49% of the order value. To conclude, for any orders above 200 USD in value, you pay 1.99%.

In comparison to other exchanges surveyed, Gemini does not stand out with its high variety of trading pairs. At the moment, the company offers access to 43 markets, with the most popular markets (trading pairs) being BTC/USD, ETH/USD and LINK/USD. There are 25 coins and 39 trading pairs on the exchange. The exchange is rated “A” which means “Transparent.” Out of 395 exchanges gathered on the nomics platform, they are ranked #18 by transparency and volume. Gemini allows trading only with one fiat currency the USD, however, the exchange is open 24/7. The Gemini exchange only supports Bitcoin and Ethereum. This is likely because Gemini seeks to be a highly trusted and institutional-friendly exchange. Many newer cryptocurrencies are yet to prove themselves over a long enough period, and if Gemini were forced to delist an asset for any reason, it would make the platform appear less sophisticated and mature. Gemini accepts deposits made by ACH (automated clearing house) in the US, and wire transfers elsewhere. It also accepts deposits in Bitcoin and Ether. There are currently no other deposit methods accepted.

The Gemini trading app is an upgrade from the company’s mobile wallet solution - it is significantly faster, has a user-friendly design and enables users to deposit fiat to buy and trade supported coins easily. The platform uses state-of-the-art matching engines hosting its trading infrastructure on Equinix’s NY5 data center, which features the most advanced technology in the world. This is the same data center used by Wall Street Banks and High Frequency Trading firms, and as a result, the company supports frequent payback offers on high-volume trades.

Since the Gemini exchange platform is so compliant with existing regulations, verification is required to set up a personal account. There are three steps to verifying your identity at this point: linking a mobile phone number for two-factor authentication, linking a bank account and finally, submitting documents to verify your address and identity.The verification process is a vital element of setting up a personal account. However, it can be argued that the mandatory regulatory compliance significantly encumbers the registration process. As previously mentioned, Gemini accepts only limited funding methods. While individual customers are given the default, zero-fee, depository account type, large institutional customers can opt for a segregated custody account type which offers an offline, secure and auditable storage called Gemini’s proprietary Cold Storage system. The latter service is chargeable, and is ideal for institutional customers like mutual funds, exchange-traded funds and hedge funds.

There is a blog and a lengthy FAQ section that help to deal with issues. When neither of these things is enough, complaints and issues are dealt with using e-mail. The exchange usually replies within a matter of hours, rather than days. However, there is no phone line and no live chat option.

Gemini’s mobile app is accessible both to Apple and Android users. It offers the same functionality as the web version, with minor differences. The app allows its users to create price alerts to stay on top of the market, set recurring buys, build crypto portfolios and maximize their trading strategies. Additionally, it is possible to schedule recurring buys for any amount and at any frequency, similar to how you contribute to your 401K or traditional savings account. An important addition is Gemini Pay that is a simple, secure, and private way to spend Bitcoin, Ether and other cryptocurrencies for purchases at retail stores across the United States. At the moment, the function is available at over 30,000 locations. At present, the app is among the only ones of its kind, allowing users to use the app on Apple Watch, making it possible to check your watch for crypto prices and receive price alerts and notifications on Gemini for Wear OS. The app requires two-factor authentication (2FA) for every account. You can secure your mobile app with a passcode and/or biometrics.

One of the most significant assets of the company is its state-of-the art security mechanism. Gemini began in order to facilitate the purchase and storage of Bitcoin through a complex system of private keys and password protected environments. Only a small percentage of the total Bitcoin on the exchange is held online, minimizing the risk of loss from hacking. While cryptocurrency companies prefer to avoid regulatory bodies, the Gemini exchange has chosen a different way and applied for the status of New York State Limited Liability Trust. It’s a good solution for platforms that plan to serve institutional customers and individuals. The company is officially regulated by the New York State Department of Financial Services (NYSDFS). Thus far, the company has experienced no severe breaches of security. Gemini has a banking relationship with a New York State-chartered bank, where all customer funds are retained. Adherence to such requirements acts like an insurance of one’s funds and cryptocurrency holdings, ensuring that they are backed by adequate monetary reserves.

According to an official blog post on September 24, 2020, the New York-based firm Gemini was granted an Electronic Money Institution (EMI) license by the financial watchdog, the Financial Conduct Authority (FCA). As a result of this process, Gemini will now be able to expand its services and conduct crypto operations in the UK as a regulated entity.