Despite Bitcoin ETF Application Withdrawals, Wall Street Shows Interest in OTC Desks for Crypto
This week, after months of delays and modifications, Bitcoin exchange-traded fund (ETF) application that VanEck, CBOE, and SolidX put together was pulled. Bakkt even put off their launch of a crypto futures vehicle. However, despite all of these setbacks, there is talk that Wall Street is still looking for digital assets that institutional investors can get behind. Though retail investors have not been getting as involves, OTC desks seem to be flourishing with the popularity of their own.
Even though the year is just starting, there is already a lot of optimism over where the cryptocurrency world will go from here. Over the last few weeks, Bitcoin has been steady, and multiple organizations have been providing new offerings to highlight the developments in their platforms.
As institutions begin to push more aggressively in their work towards Bitcoin, these investors on Wall Street have become more interested in OTC platforms. These platforms make it possible for traders to buy crypto at market prices, almost no fees, and with minor risk. As OTC platforms become more popular, more startups are trying to integrate that into their transactions. Binance is one of the most recent firms to join in these types of efforts.
Binance launched their own OTC desk on January 23rd, which follows their decision to invest $3 million in Koi Trading, an OTC platform in San Francisco. The Binance blog features a look at the in-house OTC desk for crypto-to-crypto trading. Representatives with Binance explain that accounts that have already passed “level 2” know-your-customer verification and that aim to trade at least 20 BTC worth of value at a time would be eligible. Presently, Binance has over 80 digital assets listed.
The new opportunity with Binance makes it possible for the big spenders on Wall Street and other places to invest in cryptocurrencies that were not available before now. With these exclusive opportunities, Binance is essentially bringing more interest and activity to projects that are otherwise lesser-known that big names like Bitcoin and Ripple.
Even though the decision to launch this opportunity seems minuscule in terms of the broad product lineup that Binance has created, there are some individuals who see it as a way to highlight the interest that Wall Street and other entities have in Bitcoin. In fact, the growing interest has proven to be true in the actions throughout the industry and outside of it.
Genesis Trading, for example, showed that they had “tremendous growth” last year, as their overall volume went up by 50%, year-over-year. Even a few days before the firm’s clients were notified of this influx, fintech startup Circle revealed that they had processed 10,000 OTC transactions last year, amounting to $24 billion in notional value.
Even though there are rumors that there was little fiat brought into the industry with Circle at that time, The Block published that OTC providers have seen significant inflows this year. The crypto subsidiary of DRW, Cumberland, showed that their net imbalance involving buyers and sellers went up by 60% in the second week of January.
Genesis’s Michael Moro stated that there is significant buying pressure at OTC desks right now. Even though there were many crypto holders that wanted to liquidate their assets as 2018 came to a close, this year shows that “side interest [has begun] to pick up.”
With so much success in OTC ventures from other crypto platforms in the industry, it is clear that Wall Street still has an interest in the success and profit available to them with cryptocurrency. Even though this interest will be hidden as OTC transactions are settled off-book, that does not meet institutional investors are not active.