In a first of its kind, Europe-based Flow Traders will offer bitcoin based Exchange Trading Products on its regulated stock exchange.
One of the largest Exchange-Traded Fund (ETF) traders on the Continent, Flow Traders is setting the precedent for exchanges of its kind. Soon it will, for the very first time in crypto history offer in public domain the buying and selling of crypto notes which is on regulate d stock exchanges.
CEO of Flow Traders, Dennis Kijkstra says, “People underestimate crypto. It’s big, and it is to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested – we know they are because we get requests.”
AFM says no to crypto
This announcement by one of reputed exchanges does come at a time, when the Dutch government has not been very enthusiastic about cryptocurrencies. In fact, the Financial Authority in the country, the Authority for Financial Markets (AFM) had warned people that, “We discourage activities in cryptos both by consumers and professional license holders.”
The government has suggested that users should exercise caution when investing or trading in such virtual coins, essentially because of the new business model they follow. Additionally, it is more concerned about the origins of these currencies, since they are transacted anonymously.
Hence, such a system is likely to be taken advantage of, for illegal purposes as well, rendering the system vulnerable. A spokes person for the AFM said, “Given bitcoin inability to serve the promised purpose as a currency, we don’t regard it to be an asset class.”
However, Flow Traders have sought to overlook these austere warnings by the government and engage in bitcoin in particular and cryptocurrencies in particular.
Flow Traders technology platform is built for quoting bid and will also ask prices among thousands of ETP listings. It also supports liquidity for institutional parties and off-exchange in this region. In order to build its own capability, the Exchange will now offer ETNs or Exchange Traded Notes which are based on Ethereum and Bitcoin.
According to Sweden-based exchange XBT Provider which also offers ETNs in that country, says, the move by the Dutch exchange will now allow it prime itself up to dramatically increase securities and trading. Dennis Dijkstra agrees, saying “The biggest thing is keeping the regulators on board.”
How are ETNs different from ETFs
Flow Traders suspect that the volatility and the irregular categorisation of bitcoin to add a layer of risk to its ETNs. The difference between ETNs and ETFs is that they are an alternate option for investors and will allow better presence in the cryptocurrency trading markets.
The plan thus far for Flow Traders is to hedge ETN along with CME or CBOE in terms of futures contracts and will also lower the sluggishness due to an increase in liquidity.
Lately, institutional investors such as invest firms, banks and exchanges are exploring the depths of nascent cryptocurrency. Other stock exchanges which are exploring the crypto trading avenues includes Toronto Stock Exchange (TSX), which will start trading in block-chain exchange which is a traded fund for its platform.