Trading firms are adopting Skype to negotiate, buy, sell and trade cryptocurrencies. Wealthy investors, Bitcoin miners, payment processors and, increasingly, hedge funds, have moved hundreds of millions of dollars of cryptocurrency within a span of 5 years.
Kevin Zhou, Founder of cryptocurrency-focused hedge fund Galois Capital in a comment said:
“When you have a large block trade, you would go trade through an OTC desk and you want to trade without moving the market too much or incurring too much slippage.”
The desks handle more than $100 million of cryptocurrency trades daily with minimum ticket sizes varying from $75,000 to $250,000. They are not independently audited or reported. OTC trading appeals to those people who are afraid of stashing coins and fiat currencies digitally especially after high-profile hacks.
The volume of money which is flowing is at staggering rates of 75-80 million dollars daily with monthly values reaching $1.5-$2 billion on Genesis.
Jennifer Hanley, a spokeswoman said that the Boston based circle handled up to $4 billion in OTC trades monthly over the past year.
The global head of trading Bobby Cho said that Cumberland has been adding employees and opening offices in Asia and Europe.
The firms require traders and investors to undergo know-your-customer [KYC] and anti-money laundering checks with their compliance departments. Traders and investors said that they message each other directly. Trades are settled by the firm’s back office, bilaterally
“Skype for us was the ultimate tool that was global and more or less free”
The absence of rules and regulations is troubling the OTC desks. While business is growing, the U.S. Commodity Futures Trading Commission has classified Bitcoin as a commodity. The Securities and Exchange Commission has issued a statement saying that some cryptocurrencies may be securities without specifying further. It also depends on what type of assets are traded and whether it can be traded with an accredited investor.
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