Trading platform eToro has announced that an over the counter (OTC) trading desk is being established in London to make cryptocurrency products available to hedge funds and institutional investors. The eToro platform is connected to 15 different cryptocurrency exchanges, and its business has grown rapidly since it started offering cryptocurrency services to investors. It is primarily a social trading platform friendly to new investors, and in Dec 2018, eToro partnered with Coindash to develop social trading using blockchain technology.
eToro was founded in 2006 and is regulated in Europe by the Cyprus SEC and the UK FCA. It claims more than 10 million registered users and recently expanded into the US market offering 10 cryptocurrencies to new users, with more to be added throughout 2018. According to eToro CEO Yoni Assia from Business Insider:
We’ve actually set up our corporate team here in the UK to start setting up accounts to trade on eToro. We’ve announced that we’re launching the exchange as well so, between the exchange and the OTC desk, we’re also starting to serve more potential institutions and financial institutions…We see more and more public market players and big banks who are interested in this space and feel left out because they’re not allowed to invest in crypto or ICOs”
eToro is among a number of high profile financial providers to offer cryptocurrency products to institutional investors, joining the ranks of Fidelity Investments, SBI Holdings, and Coinbase. The market space is available in large part due to the reticence of banks in providing cryptocurrency products to investors. Indeed, the bank for international settlements (BIS), sometimes called the “Central Bank of Central Banks”, has issued a damning report on cryptocurrencies, though the supreme central bank is unlikely to have anything positive to say about its direct competitor.
Ethereum and Bitcoin have been given the all clear by the SEC as non-securities and it is only a matter of time before institutions have easy access to cryptocurrency products. Goldman Sachs is launching a Bitcoin trading desk, and JP Morgan and Barclays are reported to be considering it. The demand for cryptocurrency products from institutional investors is growing. Mainstream financial providers were highly critical of the space until the end of last year when Bitcoin futures were launched on the CME and CBOE. Since this point, institutional sentiment has started to turn.
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