Social trading platform eToro is setting up a new over-the-counter (OTC) trading desk in London for cryptocurrencies amid growing interest from institutional investors. eToro CEO Yoni Assia was quoted saying to media “We are launching an OTC desk for institutions. We’ve seen more and more interest from corporates and institutions.”
Etoro prepares for large orders from institutions
OTC desks usually are trading verticals which address to clients who want to place huge orders which if placed on normal markets, it may move markets for certain assets. OTC brokers combine to create liquidity across different exchanges to fill these large orders. eToro, which lets people trade stocks, crypto, and other assets, has connections to 15 cryptocurrency exchanges around the world and is also planning to launch its own exchange.
Traditional mainstream financial institutions were largely indifferent of cryptocurrencies until last year. But with the multifold rise in price and mainstream media coverage to cryptocurrencies, there has been a certain level of interest among institutions as well. With growing interest, Exchange operators CME Group and CBOE both launched bitcoin futures at the end of last year to offer more traditional investors exposure to space.
Since the New Year, The cryptocurrency market crashed from a peak of over $800 billion in December to around $280 billion today, but that hasn’t deflated institutional interest
According to Assia institutional interest in the space was still at an early stage and it’s just the owners of various hedge funds calling out for exposure which is still pretty big demand. He further stated that its still people wanting to experiment and make money in cryptos than holding them as core assets.
The growing institutional OTC crypto market
If we see the media reports since the December last year, In the US, Circle Financial and Cumberland Mining have begun operating OTC crypto services. Goldman Sachs was also reported to be in the process of entering the field, although its CEO has denied the rumors. Additionally, JP Morgan and Fidelity are said to be assessing a move into space.
In the UK, Barclays was reported as supposedly considering launching a crypto trading desk back in April. And financial industry insiders, like David Mercer the CEO of LMAX, which recently launched a physical crypto exchange dedicated to institutional clients, expect UK banks would eventually join the market next year. In the meanwhile, big players have also set up their own private network for OTC trading, buying and selling billions every month among themselves via Skype.
A survey conducted in April 2018 by Thomson Reuters found that
- 20 percent of financial firms such as banks and hedge funds are looking to trade cryptocurrencies soon
- One in five financial firms, ranging from hedge funds to the biggest banks, are considering trading digital currency in the next three to 12 months,
- Of those that showed interest, about 70 percent said they were planning to trade in the next three to six months.
Although with no clear guidelines and regulation on ICO’s and Crypto investing, a lot of public market players and big banks are not able to participate.
With a good platform and regulation in place, will the institution apart from hedge fund investments in cryptocurrencies? Do let us know your views on the same
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.