Two reports emerged recently that the large financial trading groups E*Trade and TD AmeriTrade will be entering the cryptocurrency markets in a limited capacity.
The first was an anonymous report that E*Trade “is getting ready to let customers trade cryptocurrencies on its platform” and “will start by adding Bitcoin and Ethereum, and will consider adding other currencies in the future”. E*Trade has around 4.9 million customers, total margin receivables balance of $9.6 billion, and total assets over $65 billion. This would make it a strong competitor within the cryptocurrency sector, even against market leaders such as Coinbase and Robinhood, which also recently integrated cryptocurrency trading.
In the wake of TD Ameritrade quietly opening Bitcoin trading for some of its customers, I was just told that eTrade is preparing to begin offering both Bitcoin and Ether trading to its 5 million or so customers and is just finalizing a third party to actually hold the coins.— Nathaniel Popper (@nathanielpopper) April 26, 2019
Another report that was revealed by a trader via tweet was that TD Ameritrade would allow consumers to trade cryptocurrencies, but it was later revised that it is currently only available via their paper trading feature, which is only practice trading. The rumor is that TD Ameritrade will be partnering with digital trading firm ErisX and some believe that the ‘USD:CRERX’ symbol on the TD Ameritrade paper trading platform stands for “Crypto Exchanged Erisx”. However, when the initial trader that discovered the feature asked customer support, they said they are “not able to speak on it”.
BREAKING: BTC is now being traded on the Nasdaq! I bought one BTC through my TDAmeritrade account! According to the chart it started trading April 10, 2019!! Other digital assets are soon to follow!! 🚀🚀🚀 pic.twitter.com/1VgE1Whoa4— MacroTrader (formerly cryptopolis_x) (@MacroTrader_x) April 22, 2019
Drawbacks of institutional investors reversing their cryptocurrency stance
The involvement of institutional bankers and traders with cryptocurrencies have come a long way from just two year ago when Jamie Dimon, CEO of JP Morgan, publicly said that if he caught one of his employees trading cryptocurrencies, he “would fire them in a second”. Now, JP Morgan is launching their own digital coin, but so far only institutions are going to have access to the coin. During their announcement, JP Morgan added that they “have always believed in the potential of blockchain technology and [they]are supportive of cryptocurrencies as long as they are properly controlled and regulated”. The reversal sheds light on how traditional banking and finance sees the potential of digital money on the blockchain, but only so long as they still hold control over the money rather than complete decentralization.
This brings attention to services like Robinhood, which was founded in an attempt to make banking further benefit consumers rather than large investors. Robinhood has recently enable cryptocurrency trading, but much like Square, does not explicitly allow consumer to actual own the cryptocurrency since consumers do not have access to their private keys. If a user does not control their private keys, they do not fully control their cryptocurrency since they cannot independently use it outside of the platform. Thus, these platforms have essentially further reduced the cryptocurrencies they trade to another speculative trading asset rather than alternative money that can be used in real life. The new institutional players that are entering the sector have not specified if they will enable consumers and traders to have access to the private keys of the cryptocurrencies they trade.
Dash’s prospects for attracting institutional investment
While not explicitly mentioned by E*Trade and TD AmeriTrade, Dash has nevertheless made inroads in extending access to institutional investors. Fidelity, another large investment and trading firm, has been a relatively early adopter of cryptocurrencies among the larger institutions and has a 10% stake in Neptune Dash, the masternode sharing company. Neptune Dash has made itself easily available to the financial world by being traded on European, Canadian, and United States stock exchanges. This has vastly opened up access to Dash, and specifically masternodes, to those that cannot get more involved in cryptocurrency through cryptocurrency exchanges either because of legal reason or educational reasons. Furthermore, services like Bitgo, which integrated Dash in 2018 and cater to institutional investors that require custodial services, are getting more attention as seen in the $57.5 million USD Series B fundraising round that included investors like Goldman Sachs and Mike Novogratz. These integrations, investments, and services involving the Dash community help position Dash for greater attention as the overall cryptocurrency sector grows and individuals start looking to using cryptocurrency as money in everyday life.
Author: Justin Szilard