Square, a financial service provider, revealed that it is now trading through “private broker-dealers” in lieu of “public cryptocurrency exchanges”. The move is said to take effect on Square’s Cash app, which aids Bitcoin [BTC] transactions.
The change, which was divulged to the public this week in Square’s quarterly report, is a stride towards contributing to a more competent Bitcoin trading service, experts say. Cryptocurrency enthusiasts argue that by shifting from trading on public exchange platforms to OTC [Over The Counter] channels, Square will be able to construct a platform that is safe and quick. This would effectively create less price volatility when users trade in large amounts of Bitcoin.
Experts believe that the issue with public exchanges is that they are vulnerable to hacks, essentially costing users millions of dollars. There is also the added factor of transactions taking a long time to process, extending from several hours to even days.
Hunter Horsley, the CEO of Bitwise Asset Management said:
“There are many merits to trading OTC, which might be motivating Square’s switch.”
When financial service providers move to OTC platforms where exchange trading is done directly between two bodies without the surveillance of an exchange, several key issues such as may be solved, authorities say.
Square is also new to the commerce of Bitcoin trading. Square is said to have produced $37 million in profits on Bitcoin but sources say they have spent approximately the same amount in offering free trading to users on their Cash app.
Meltem Demirors, The Chief Strategy Officer at Coinshares, a cryptocurrency investment firm said:
“Working with a broker likely gets Square better pricing and better execution services than floating orders on the open market, as well as more confidentiality.”
Sarah Friar, The Chief Financial Officer of Square said:
“The payment company launched Bitcoin trading in its Cash App in January. In order for customers to be able to buy and sell Bitcoin instantly, Square holds a certain amount of cryptocurrency on the customer’s behalf. In the time between Square buying Bitcoin and customers making a trade, the price can change drastically and the company can lose money.”
It is unconfirmed as to which of the OTCs Square will collaborate with but June saw Square partnering with Genesis Trading, a firm that deals with Bitcoin brokerage. Other partnerships, if any, are yet to be announced.
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US 2020 Presidential Candidate promises to provide better regulatory clarity on cryptocurrency market
Andrew Yang, the United States 2020 Democratic Presidential candidate, released a new policy for the regulation of the cryptocurrency space on April 20. The new policy statement titled ‘Crypto/ Digital Asset Regulation And Consumer Protection’, emphasized on the need for regulating the digital asset place, and also listed the actions Yang would do for the cryptocurrency market as the President.
Yang said on Twitter,
“New Policy #22 – Digital Asset/Cryptocurrency Regulation. Investment in cryptocurrencies and digital assets has far outpaced our regulatory frameworks. Investors need to know what their treatment will be in order to properly innovate in the U.S.”
On the official site, Yang stated that the cryptocurrencies “have quickly grown to represent a large amount of value and economic activity”. He further spoke about the lack of regulation of the cryptocurrency space, adding that the “patchwork of varying regulations” introduced by states has made it “difficult for the US cryptocurrency market” to compete with any other market, importantly China and Europe.
The Presidential Candidate further listed three key problems that needed to be solved, growth of cryptocurrency market being faster than that of the government’s response, differing regulations in different states, and uncertainty of the framework that would be unveiled.
Fang, a Twitter user, said,
“A candidate that is actually in touch with technology, blockchain and crypto. I missed the Bitcoin train but got in early on Ethereum mining: A significant % of my net worth is in crypto. So far I’ve done nothing but HODL. Our government has no idea what to do with digital asset”
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