INSUBCONTINENT EXCLUSIVE:
By Nathaniel PopperSAN FRANCISCO: While a number of large financial institutions have discussed trading bitcoin, one firm has already begun
Very quietly.
The financial firm, Susquehanna International Group in Bala Cynwyd, Pennsylvania, just outside Philadelphia, is one of the
largest players in trading traditional investments like stocks, options and exchange-traded funds, or ETFs
Over the past two years, the privately owned company has also built up a trading desk of around a dozen people that buys and sells millions
500 clients, with plans to expand.
The move is the latest sign that the virtual currency markets, which were once relegated to the fringes
of the financial world, are being embraced by big, mainstream investors.
The parent company of the New York Stock Exchange, the
Intercontinental Exchange, has been in talks about opening a subsidiary for cryptocurrency trading, and Goldman Sachs is on the verge of
opening its own trading operation.
But Susquehanna, which has around 1,800 employees around the world, has a lot more money backing its
participants in the virtual currency markets.
The arrival of big financial institutions has raised concerns among some bitcoin aficionados,
transactions.
Not so, said Bart Smith, the head of the digital asset group at Susquehanna
best bet is to challenge gold as a scarce commodity that can be moved around more easily.
The original bitcoin software determined that only
21 million bitcoin would ever be created
said.
Susquehanna first experimented with trading bitcoin in 2014 after the investor twins Cameron and Tyler Winklevoss asked the firm about
being involved with a bitcoin ETF that they had applied to regulators to create.
Regulators eventually denied that application
But Susquehanna kept its one bitcoin trader on board, and then added a few more last year when the cryptocurrency markets took off.
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 in volume in recent months.
Susquehanna will trade futures, which are contracts
tied to the future price of bitcoin
It will also allow customers to buy and sell actual bitcoin and a few other cryptocurrencies like Ethereum and bitcoin cash.
To make these
available to customers, Susquehanna recently amended the broker dealer license it has on file with regulators
That change will allow the company to trade cryptocurrencies that are labeled by regulators as securities
categorized as securities and traded only by regulated entities.
Most of the cryptocurrency exchanges where Susquehanna trades are largely
Bloomberg recently reported that United States authorities were investigating whether some traders were taking advantage of this to
manipulation, but cryptocurrency markets are still very immature compared with the other markets where Susquehanna trades, especially given
the lack of regulations for many of the largest exchanges holding cryptocurrencies.
He said the single biggest problem for sophisticated
investors was the security risk in holding virtual currencies
tokens with a password or private key that no one else knows
If the private key is compromised, a hacker can take the coins, and the owner has no way to get them back
That has led to big losses at several bitcoin exchanges.
Susquehanna built its own systems for storing the cryptocurrencies it is holding
should be worth.
There is still little agreement on what factors traders should take account of when deciding on a value for
cryptocurrencies, given that many of the expected uses for digital tokens are still hypothetical
