Trading firms are indeed negotiating the buying, selling as well as lending digital currencies such as bitcoin and ether over Skype, catering to the big investors , thus looking forward to avoid rocking the already volatile online exchanges.
Some 20 traders as well as clients who are wealthy investors like bitcoin miners, payment processors and focus being on hedge funds, have in around five years managed over-the-counter market business of moving hundreds of millions of dollars of cryptocurrencies on a daily basis.
Some dealers do admit that their desks do often handle more than $100 million of cryptocurrency trades daily with minimum ticket sizes between $75,000 and $250,000.
OTC trading can indeed appeal to those wary of stashing coins and fiat currency with required digital exchanges after a high-profile hacks and other issues are dealt with.
The OTC transactions are rather settled through bank wire transfers and by also sending cryptocurrencies to digital wallets.
Volume spike
Genesis on an average does handle $75 million to $80 million in trades daily, 10 times year-ago volumes.
Boston-based Circle does handle up to $4 billion in OTC trades monthly over the past year.
Cumberland has rather been adding employees and also opening offices in Asia and Europe. Most investors tend to message traders directly, but are also required by firms to undergo “know-your-customer” and “anti-money laundering checks” with their compliance departments, traders as well as.
Specialized crypto traders are rare, Cho said, so hires should have a good grasp of risk management and interest in the new asset class.
Nearly all traders on major desks are men in their mid-20s or early 30s. Genesis posted a junior trader job and all 60 applications were from men.
Regulatory muddle
While business is growing, OTC desks are grappling with an absence of clear rules from regulators.
The US Commodity Futures Trading Commission does refer to bitcoin as a commodity. The Securities and Exchange Commission has said some cryptocurrencies may be securities without specifying further.
Circle’s OTC desk does trade a “very limited” selection of cryptocurrencies that are aligned to its regulatory licensure.
Cumberland trades nearly 25-30 cryptocurrencies and also encourages regulators to work with participants so that they fully understand the market and the implications of any new laws and rules.
