We brought together an eclectic group of bitcoin specialists: Gavin Smith, Cameron & Tyler Wilnklevoss, Liza Aizupiete, Dominic Marella and Chris Tanger, who operate bitcoin exchanges, offer service in the space and trade cryptocurrencies, to discuss how it works and how it is traded.
MODERN TRADER: How do your users differ from more traditional retail traders in futures, options and equities?
Gavin Smith: People using our site tend to be more sophisticated traders, not only people looking to gain exposure to cryptocurrency as an asset class. They use our site to maximize the return they derive from their cryptocurrency position, because they can get the benefit of crypto price increases while also using it as collateral to take stock and futures positions.
Cameron Winklevoss: Gemini is a digital asset exchange and custodian. We do not believe the majority of our individual and institutional customers on our platform differ greatly from other traders and allocators participating in more traditional asset classes. In addition, the majority of customers utilizing Gemini’s exchange and custody solution view digital assets, such as bitcoin, as an asset class within a broader allocation strategy. Our platform enables our customers to access this asset class in a regulated and institutionalized manner.
Liza Aizupiete: Globitex traders and generally bitcoin traders are a more enthusiastic crowd, but perhaps with lesser demands for connectivity, reporting and even matching. For example, there are fewer algorithmic traders out here, partially also because the traditional retail trader has not caught up to make a sufficiently deep interest in the bitcoin trading books. Therefore, the technical connectivity that exchanges provide varies widely.
MT: How would someone go about using your platform? What do they need to get started?
GS: Once a client has gone through the [know your customer] checks, they are free to use the service (U.S. customers must also be accredited investors under SEC regulations). The key aspect of the service is that we are cryptocurrency based, not fiat currency based. All positions are collateralized using cryptocurrencies and any profits (or losses) are swept into cryptocurrency before crediting the customer’s account.
Tyler Winklevoss: Individuals and institutional clients looking to trade or custody digital assets with Gemini can open an account through our website. Gemini operates as a New York trust company, meaning all customers are required to successfully pass through our know-your-customer and anti-money-laundering onboarding process. The onboarding process is similar to opening a bank account with a commercial bank.
LA: In order to trade on Globitex, all the trader needs is a registered account. The account opening procedure is similar to opening a brokerage or a bank account, in our case complying with the EU AML standards. Globitex provides both individual and corporate accounts.
MT: Are most users simply getting exposure to bitcoin or actively trading it in a directional manner? Can you break down the ratio of the two?
GS: Sixty percent of our clients are taking advantage of the fact that you can hold onto bitcoins and benefit from other assets classes. But there is a slightly smaller group that is actively using the Currency Switch service to take advantage of market directionality while retaining their stock position. This is because it’s easy to move collateral between bitcoins and U.S. dollars, sterling, euros or Swiss franc and then back again.