Flow Traders NV is the biggest trader of exchange-traded funds in Europe. The company recently announced that it would be entering the crypto market despite warnings by the Dutch regulator about the risks of trading in cryptocurrencies.
Flow Traders is creating new markets for bitcoin and ether. Effects are already being felt as XBT Provider, who issues crypto exchange-traded notes in Sweden has reported an increase in trading of its securities in recent months.
This is a big move for the European trader. U.S. traders have already started making markets, but Flow Traders is the first to publicly announce that it is buying and selling crypto notes on normal stock exchanges.
This changes the market since it would allow people to invest in bitcoin and ether without spending a lot of money.
In a statement, Dennis Dijkstra, Co-Chief Executive Officer of Flow Traders, said
People underestimate crypto. It's big, and it is to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested — we know they are because we get requests
Flow Traders is a speed trader, which means it hedges every trade as quickly as possible. With the potential of crypto, the company has been trying to find new ways to hedge trades, which is benefiting its forex trading business, though the company is keeping it secret on how it does this.
The move into cryptocurrencies by Flow Traders was prompted by 2017's low trading volumes, pushing the company into attempting new markets. Cryptocurrencies were quite attractive to the company because extremely volatile markets are where speed traders
Dutch Watchdog Not Happy With Move
However, this excitement about cryptocurrencies is not shared by the Dutch government. The Dutch Authority for the Financial Markets (AFM) is discouraging the general use of cryptocurrencies. It points to the relative newness of the technology and the fact that it allows for anonymous deals as ways that it can be abused. This is why it does not consider it as a valid asset class.
However, the AFM has made no formal step to ban the use or trading of cryptocurrencies, leaving Flow Traders with a free hand. There are different views being adopted over the global cryptocurrency market. Some of the top financial institutions in the world have denounced bitcoin and other cryptocurrencies as a passing fad while other major financial firms such as Goldman Sachs has embraced the crypto market.
Goldman Sachs has opened up a digital asset trading desk, while Barclays has announced that it plans to provide banking services to Coinbase. Many think these are baby steps for cryptocurrencies to enter into the mainstream of the financial world.