The first regulated exchange for cryptocurrencies has opened for beta testing. Blocktrade.com is regulated under the MiFID II framework, approved by the Financial Markets Authority, a member of ESMA (European Securities and Markets Authority).
Blocktrade.com’s exchange platform will trade Bitcoin (BTC), Ethereal (ETH), Litecoin (LTC), Bitcoin Cash (BCH) and Ripple (XRP). Crypto Traded Indices™, Security Tokens, and Tokenised Assets will be gradually added later in 2018. Blocktrade.com’s exchange is now open for registration and is expected to roll out fully in September.
“This is an ideal way for regulators across Europe to recognize cryptocurrencies as a new asset class and put in a regulatory framework,” said Luka Gubo, CEO of Blocktrade.com.
There are over 1500 digital currencies registered at over 170 crypto exchanges. Over 60 trades per minute take place at the busiest. Yet none of these are regulated under MiFID II. As the Financial Times says, “Crypto bros are known to self-identify as libertarians, believing in the primacy of individual autonomy and the minimal interference of government or any other centralized authority in our lives”.
Many institutional investors regard these exchanges as risky, because they are not transparent, or are barred from trading due to compliance requirements preventing them from dealing in unregulated assets. Gubo, who has spent the last year talking to fund managers, argues there is substantial demand from institutions to invest through cryptocurrencies.
“If an institutional investor wants to invest in cryptocurrencies, they currently have a problem. Where do you send the order to buy? There’s a lot of speculative valuing in cryptocurrencies, so there’s currently no way to lower the volatility — proper regulation is the only way to lower that risk .”
Traditional stock exchanges have been supportive to the idea, says Gubo, a former quantitative finance investor. “The regulated exchanges see the unregulated ones as unwelcome competition because they break the law to their own advantage. These exchanges need to follow the rules, but they don’t”.
He believes that if more institutions enter the cryptocurrency markets, some of its volatility will disappear.
He also believes that Initial Coin Offerings and other token assets will also be traded eventually on the exchange. “We have the technology, but there is no regulation: investors should be able to trade inside an existing regulatory framework.”
Gubo says that stock exchanges have welcomed Blocktrade.com’s exchange. “They see other new crypto exchanges as competition. They are breaking the law and have a huge unfair advantage because they don’t need to follow any rules.”
Registration is now open, but the full rollout of the exchange will happen at the beginning of September. data.bitcoinity.org
Regulated exchange platforms could have an impact on the value of the assets traded. Some traders believe the U.S. Securities and Exchange Commission (SEC) will introduce a bitcoin exchange-traded fund (ETF). As Laura Shin reports elsewhere on Forbes.com, despite its validation from Silicon Valley and Wall Street, the cryptocurrencies market is still a Wild West.