A trading company with 10 million customers is setting up a crypto desk for hedge funds and banks
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 told Business Insider: "We are launching an OTC desk for institutions. We've seen more and more interest from corporates and institutions."
OTC desks cater to clients who want to place large orders that may otherwise move markets for certain assets. OTC brokers pool liquidity across different exchanges to fill these orders. eToro, which lets people trade stocks,
crypto, and other assets, has connections to 15 cryptocurrency exchanges around the world and is planning to launch its own exchange.
Assia said: "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."
ethereum cofounder Vitalik Buterin.eToroMainstream financial institutions were largely dismissive of cryptocurrencies until last year but have grown increasingly interested after a surge in the value of bitcoin. Exchange operators CME Group and CBOE both launched bitcoin futures at the end of last year to offer more traditional investors exposure to the space.
The cryptocurrency market crashed from a peak of over $800 billion in December to around $280 billion today, but institutional interest has persisted.
Goldman Sachs-backed cryptocurrency startup Circle and Cumberland
Mining, a division of Chicago high-speed trading company DRW, both offer OTC crypto services and have reported rising interest from institutions. Goldman Sachs has begun setting up a desk to trade on cryptocurrencies on behalf of clients, and the likes of JPMorgan andFidelity are also assessing the space.
Assia said institutional interest in the space was still at an early stage. "It's the owners of hedge funds at this point," he said when asked who was contacting eToro.
"What we're seeing is a sense of interest and people who want to experiment but not yet take their core assets in. Corporates are corporates. But we're seeing more interest from the city folk who potentially could take that interest institutionally but the initial interest is in experimenting — where we were in 2010."
'Public market players and big banks feel left out'
Financial News reported recently that eToro had held preliminary talks with bankers about a potential IPO. Assia was circumspect, telling BI the discussions were "in a standard course of business for a business that raised $100 million and significantly scaled its revenues."
"Obviously, we have the surrounding people who are interested in taking us there but it's nothing that has been set in stone."
He added that bankers were likely keen to capitalise on the surge in interest in cryptocurrencies among investors.
"I think there is growing institutional demand and interest of public investors to understand whether they can join the party," Assia said. "That is something we definitely see out there. 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 was founded in 2006 and claims to have over 10 million retail customers worldwide, with the majority in Europe. The online platform lets investors track, follow, and even automatically copy the trades other investors. This week the business announced that customers can now buy and hold both stocks and cryptocurrencies in the same portfolio.