The SoftBank-backed startup will enter the crypto sphere as a liquidity provider competing with other established service providers. This will enable its partners’ retail clients to trade crypto on their platforms.
DriveWealth, a New Jersey-based stock brokerage firm backed by Japanese tech giant SoftBank is launching two subsidiaries to enable its partners to offer crypto trading to retail traders and investors. A CNBC report shortly after the acquisition stated that the two subsidiaries would offer Bitcoin and Ether trading opportunities beginning April or May this year.
Commenting, DriveWealth CEO Bob Cortright said he hoped that the end-to-end crypto trading system and the algorithmic-trading platform, which his company utilizes, could bring greater transparency to the digital asset market. The firm has 100 partners globally and a customer base of over 15 million investors. Cortright stated:
“In the crypto space right now, it’s still the Wild West; prices are all over the place. There’s very little price discovery, and there’s little consistency with spreads. We want to change that.”
Compete with Coinbase’s “unsustainable” transaction speed
Cortright is the co-creator of Bank of America’s electronic-trading platform, and he believes that the involvement of watchdogs would see trade fees collapse and competition increase. According to him, DriveWealth plans to become a crypto liquidity provider and compete with Coinbase’s “unsustainable” transaction speed. He explained:
“As regulatory environments tighten around crypto and customers get more focused on spreads and efficiency, we can’t continue in a world where you can charge 200 basis points on a transaction.”
Crypto is one of the most requested products among partners
The largest crypto exchanges like Coinbase, Gemini, and Binance US have high exchange fees, which have irked users for quite some time. Coinbase, a leading US-based cryptocurrency exchange, charges fees as high as 4.5% of the transaction value in addition to separate spread fees on its platform. The exchange’s domination has given rise to the “Coinbase effect” – a crypto phenomenon wherein a Coinbase listing positively affects a token’s price.
According to DriveWealth, crypto is one of the most requested products among partners, and the same drove DriveWealth to space. The new crypto offerings by the firm will be made possible by DriveWealth’s recent acquisition of Crypto-Systems, a separate crypto startup. The DriveLiquidity subsidiary provides liquidity for partners wishing to invest in and trade cryptocurrencies. Cortright concluded that numerous companies across various fields are lining up to allow customers to earn rewards in digital assets. He added:
“Even the established, large e-commerce players are finding that, when surveying their clients, a huge percentage wants to own some crypto.”
The entrance of new players coming to the crypto space offering cost-effective and accessible options for crypto trading and investing could cause the monopoly of more prominent exchanges like Coinbase. On the other hand, such alternatives could introduce more retail crowds to the crypto space, thus lifting the larger narrative for digital assets.