Ever since the European Parliament adopted a supportive view toward the use of blockchain technology and cryptocurrencies, more firms have been descending from the fence and dabbling in the sector for the first time.
The largest ETF trader in Europe is also going the same way. Flow Traders NV, an Amsterdam-based speed trader, will now jump into the crypto exchange-traded notes (ETN) sector. The co-CEO of the company, Dennis Dijkstra, announced the company’s move recently.
Crypto Ambitions Develop Despite Regulator Warnings
The Dutch company’s regulator has frequently urged customers not to buy and sell digital currencies. As reported by Bloomberg, Dijkstra noted that “people underestimate crypto.” He went ahead to say:
“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.”
A Swedish crypto ETN issuer, XBT Provider, said that the company’s securities trading has “dramatically increased” in the past few months. These activities don’t amuse the Dutch Authority for the Financial Markets. Nienke Torensma, the regulator’s spokesperson, said:
“By virtue of its newness and the anonymity it potentially offers, it is very prone to abuse. Given its inability to serve the promised purpose as a currency, we don’t regard it to be an asset class.”
Moving Into Uncharted Territories Is Exciting and Profitable
Five US-based speed traders have already made headway into the digital currency sector in a hush manner. However, Flow Traders has not kept its move a secret. It is the first company to acknowledge its crypto ETN activities publicly. The advent of such firms in the crypto sector would help widen the scope of digital currencies and establish them as a viable asset class. Moreover, they could also send a message that cryptos are a more straightforward and cheaper way to invest.
Flow Traders will hedge its trades quickly, which could provide “big spillover benefits,” according to Dijkstra. These hedges will be in the form of Cboe Global Markets’ and CME Group’s crypto futures contracts. The details of their hedging strategy are unclear.
Goldman Sachs Group, Inc., has already announced a digital-asset trading desk, while Barclays plc recently partnered with US-based crypto exchange Coinbase, Inc., to provide it banking services in the UK. For Flow Traders, the move isn’t just about being a part of innovation but also about survival. The firm traded ETFs worth 244 billion euros in the first quarter of the year, of which Europe contributed funds worth 143 billion euros.
Dismal figures in their traditional markets are now prompting companies to move into the crypto sector. The Dutch firm has an advantage over Wall Street banks as speed traders make the most money in volatile markets.