Interactive Brokers — seen as the e-broker with some of the most sophisticated clientele — is slated to start trading cryptocurrencies on its platform in the coming months.
“Customers certainly are asking for [crypto trading] and we expect to be ready to offer it to them by the end of the summer,” Interactive Brokers Chairman and CEO Thomas Peterffy said Wednesday at the Piper Sandler Global Exchange & FinTech Conference.
Investors, both retail and institutional, have poured into bitcoin and other digital assets in 2021. Bitcoin’s price has soared to above $34,000 from the $9,000 in June of 2020. The price of bitcoin has experienced wild volatility recently due to headlines on a China crackdown, Elon Musk and investors taking excessive risk.
The price of bitcoin rose 6% to the $34,890 level on Wednesday, after falling on Tuesday which may be related to concerns over security of the cryptocurrency after U.S. officials managed to recover most of the ransom paid to hackers that targeted Colonial Pipeline.
Currently, Interactive Brokers offers the trading of bitcoin futures on its platform.
Rival brokers Fidelity and Charles Schwab don’t offer direct crypto trading on their platforms, but do offer some access to some related funds. However, stock trading app Robinhood does offer crypto trades.
Coinbase Global — the world’s largest crypto exchange — is how many investors access the digital assets. Trading volumes totaled about $30 billion in the first quarter of 2020. The newly public company got its first sell rating on Wall Street from Raymond James on Wednesday on concerns about competition from the traditional brokerage firms.
“The vast majority of its revenues currently come from trading commissions and over and over again history has shown that brokerage and exchanges see excess profits competed away unless there is a structural barrier to entry,” the note said.
Interactive Brokers offering bitcoin trading will further lower the barrier to entry for individual investors to access the digital assets. However, the unregulated coins could pose safety risks to the established online brokers.
“As for hurdles, the greatest hurdle is how do you keep you customers 100% safe,” added Peterffy. “How do you make it 100% sure that no one will steal their coins in spite of the fact that they are untraceable. We will find out more about this when we open for business at the end of the summer.”
As of the first quarter of 2021, Interactive Brokers had 1.33 million customer accounts and $330.6 billion in customer equity.
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