Much like your eccentric uncle swears to have seen Bigfoot, the Loch Ness Monster, or -- for the West Virginia readers among us -- Mothman, many industry professionals have claimed for months to have seen evidence that institutional investors are preparing to enter the cryptocurrency…
Much like your eccentric uncle swears to have seen Bigfoot, the Loch Ness Monster, or — for the West Virginia readers among us — Mothman, many industry professionals have claimed for months to have seen evidence that institutional investors are preparing to enter the cryptocurrency markets in a major way.
However, the months dragged on, the bitcoin price continued to plunge, and yet the long-fabled advent of the institutional messiahs never arrived — much to the delight of /r/Buttcoin.
That may be changing, at least according to one over-the-counter (OTC) cryptocurrency trading desk, which facilitates off-book trades for institutions, hedge funds, and other large-scale buyers and sellers.
Speaking with CNBC, Circle CEO Jeremy Allaire said that, his firm’s institutional trading desk — Circle Trade — experienced a 30 percent increase in new institutional clients in May, even as the bitcoin price plunged within sight of its year-to-date low (a mark it ultimately crossed last weekend).
“In May, which was a challenging month, we saw a sharp increase of unique new counter-parties,” Allaire said. “A lot of folks on the institutional side are on-boarding, and getting their ducks in the row.”
Commenting on that development, he said that Circle had identified the lack of an electronic trading interface as one hindrance to more institutional activity on OTC cryptocurrency platforms.
Despite managing more than $2 billion worth of trades every month, Circle Trade, like most other OTC brokers, has heretofore arranged trades over the telephone or instant messaging programs like Skype.
Now, the firm — which is now valued at close to $3 billion following a recent $110 million funding round — is automating that process through an electronic interface.
“Major institutional investors don’t go through a telephone broker. They go through an electronic interface,” Allaire said. “We’re maturing this into a more traditional product; it’s much faster and a more flexible way to trade.”
As CCN reported, Circle is doing more than just updating its trading interface to attract sophisticated clients. Allaire has also said that, in the near-term, the firm plans to register with federal regulators as a broker-dealer, which will allow it to list securities on its platforms. Additionally, Circle intends to pursue a national banking license at some point in the future.
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Last modified: January 24, 2020 11:06 PM UTC