United States-based financial firm Susquehanna International Group has been privately organizing millions of dollars’ worth of cryptocurrency trades for the past two years, according to a report by The New York Times.
The company, based in Bala Cynwyd, PA just outside of Philadelphia, is one of the country’s largest financial firms for traditional investment management, including stock trading, options trading, and ETFs. For the past two years, however, the privately-owned company has built a specialized division dedicated to cryptocurrency trading – and that division has made numerous major trades across the crypto industry.
Here’s how The New York Times explained it:
“Over the last two years, the privately owned company has also built up a trading desk of around a dozen people that buys and sells millions of dollars’ worth of bitcoin and other virtual or cryptocurrencies in private deals. Now the firm is opening trading to a small group of its 500 clients, with plans to expand.”
A number of large financial institutions in the United States have discussed trading bitcoin, but Susquehanna International Group may be further along than any of its competitors.
It’s yet another sign that major financial firms are embracing bitcoin and cryptocurrencies. Once, bitcoin was derided by Wall Street and major financial firms. Now, it presents a growing opportunity.
Susquehanna, Unlike Hedge Funds, Will Offer Clients Direct Access To Crypto Trading
Today, Susquehanna Financial Group has approximately 1,800 employees based worldwide. The company is also expected to have broader reach than some of the other financial players that have opened bitcoin and crypto trading desks:
“But Susquehanna, which has around 1,800 employees around the world, has a lot more money backing its trading desk — and a lot more ability to interact with clients — than the hedge funds and trading firms that have also been early participants in the virtual currency markets.”
Meanwhile, the parent company of the New York Stock Exchange (NYSE), the Intercontinental Exchange, has opened discussions about launching a crypto trading subsidiary.
Goldman Sachs is also reportedly preparing to launch its own cryptocurrency trading operation. Susquehanna might have both of these firms beat, however, when it comes to customer engagement, including accepting direct orders from clients for bitcoin and crypto purchases.
Susquehanna’s history with bitcoin dates all the way back to 2014. As originally reported by The New York Times, Susquehanna first experimented with bitcoin trading in 2014 after Cameron and Tyler Winklevoss, known for their bitcoin exchange Gemini, asked the firm about being involved with their bitcoin ETF.
The application for that ETF would eventually be denied, although Susquehanna kept its single bitcoin trader employed at the firm. Over the years, they eventually added more bitcoin traders, turning their bitcoin trading operation into a full-fledged department of the company.
It wasn’t until recently, however, that Susquehanna decided to ramp up its operation:
“The firm decided to step up its operation, and go out to clients, after seeing the success of bitcoin futures contracts, which were introduced by exchanges in Chicago late last year and have been growing volume in recent months.”
How Does Susquehanna’s Bitcoin Trading Work?
Susquehanna will trade bitcoin futures. Bitcoin futures first appeared on exchanges in December 2017. They’re contracts tied to the future price of bitcoin.
Susquehanna has already amended its broker-dealer license on file with regulators, allowing it to legally trade cryptocurrencies on behalf of users. Although it’s not required yet, US regulators may eventually allow only regulated exchanges to buy and sell cryptocurrencies on behalf of clients.
How Does Susquehanna Keep Crypto Funds Secure?
According to The New York Times, Susquehanna has developed its own system for storing cryptocurrencies it plans to hold for more than a day. To deter hackers, private keys are kept in devices in an off-site facility disconnected from the rest of the company’s computer systems.
In other words, Susquehanna uses an off-site cold storage system to store its enormous cryptocurrency accounts.
“We believe that this technology and this asset class is going to change some facet of financial services, and we think it is going to exist forever,” said Bart Smith, head of digital assets at Susquehanna International Group. https://t.co/zwpO0ekVAt
— NYTimes Tech (@nytimestech) June 6, 2018
Susquehanna International Conclusion
Even today, there are few major financial firms involving in bitcoin or crypto trading. However, things are clearly starting to change. They began changing when bitcoin futures were launched in December 2017. Now, Susquehanna International Group is one of the largest US-based financial firms to get involved in bitcoin trading. In the near future, Susquehanna plans to offer crypto trading to some of its 500 clients.