Crypto Exchanges Eye takes on Robinhood with expansion into stock trading

(Bloomberg) – Cryptocurrency exchanges FTX US and Bitstamp Ltd. are considering offering stock trading in the United States, a move that would allow them to diversify while venturing into the territory of traditional financial firms and popular app providers such as Robinhood Markets Inc.

FTX US is working on adding stock and options trading, and a launch could potentially take place in “a few months,” chairman Brett Harrison reiterated on Twitter on Tuesday. Initial features planned as part of stock trading include stock picking, displaying basic fundamentals such as market capitalization and P/E ratios, and tracking portfolio performance. A spokesperson for FTX US confirmed that the company “continues to review” future stock and options trading integrations, without providing further details.

Bitstamp, one of the oldest active crypto exchanges, is also planning to enter new markets such as stocks, non-fungible tokens and crypto derivatives, Bobby Zagotta, CEO of Bitstamp USA Inc., said in an interview, citing “significant investments” in these areas and the benefit of keeping users on the platform for trading across all asset classes.

Offering stock trading would create a streamlined experience for Bitstamp’s more than 4 million users, but it’s a “very competitive space, and there are some very big players,” Zagotta said. If it decides to pursue these areas of expansion, Bitstamp can either build the product in-house or consider acquisitions, which “can be an accelerator from a licensing perspective,” he added.

Cryptocurrency exchanges have expanded into new business areas to reduce their reliance on trading revenue. Trading volume on some of the major crypto exchanges declined during the recent market selloff, and some analysts say a “crypto winter” could be underway. Offering stock exchanges means that crypto exchanges could capture meme stock investors, setting them on a collision course with Robinhood and eToro, which offer both crypto and stock exchanges.

Some crypto exchanges offer trading tokenized versions of stocks like Apple Inc. and Tesla Inc. that mirror the prices of the securities they track, but this effort has been pushed back by regulations. Binance Holdings Ltd., the world’s largest crypto exchange, stopped supporting equity tokens last October, just months after the product launched.

When asked if Binance would consider offering stock trading, a Binance spokesperson said that it “will remain focused on developing cutting-edge blockchain technologies for our users and expanding into markets that more naturally complement the future of blockchain.” Coinbase Global Inc., the largest US crypto exchange, declined to say whether it plans to offer stock trading.

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