Stock brokerage giant TD Ameritrade bets on a new cryptocurrency exchange

  • The U.S. brokerage firm announced a strategic investment in an exchange called ErisX, which offers both bitcoin spot and futures trading.
  • “We wanted to find a platform that would be fully regulated, and something that has that capital markets feel,” says JB Mackenzie, head of futures and foreign exchange trading at TD Ameritrade.
  • High-speed trading company Virtu Financial will also back the crypto exchange.
A pedestrian passes in front of a TD Ameritrade Holding Corp. location in San Francisco, California.
David Paul Morris | Bloomberg | Getty Images
A pedestrian passes in front of a TD Ameritrade Holding Corp. location in San Francisco, California.

Despite a massive slump in cryptocurrency prices, TD Ameritrade is doubling down on the sector.

The U.S. brokerage firm announced a strategic investment Wednesday in an exchange called ErisX, which offers both bitcoin spot and futures trading. High-speed trading company Virtu Financial will also back the exchange.

"We continue to see our retail clients seeking access to trade digital currency products," JB Mackenzie, managing director of futures and foreign exchange for TD Ameritrade, told CNBC in a phone interview. " We wanted to find a platform that would be fully regulated, and something that has that capital markets feel."

The entire market capitlization of cryptocurrencies has dropped by 50 percent this year alone, according to CoinMarketCap.com. Bitcoin itself has plummeted more than 50 percent this year, and was trading near $6,480 Wednesday. Still, Mackenzie said customers are looking for ways to add the volatile cryptocurrency to their portfolios.

"It's a young product in fast moving ecosystem, and while bitcoin may not have the same demand as it did in December, there is still demand nonetheless," MacKenzie said. "We listened to our customers — what we continued to hear was that they wanted access to trade digital currency products."

The crypto exchange is regulated by the Commodity Futures Trading Commission, a prerequisite for investing, Mackenzie said. Certain aspects of the ErisX offering are still pending regulatory approval, a TD Ameritrade spokesperson said.

Another key feature for the deal was that this exchange offers access to both futures and physical bitcoin products, Mackenzie said. Coinbase, reportedly valued at $8 billion, only offers spot trading of bitcoin. ErisX supports trading, deposits and withdrawals for bitcoin, bitcoin cash, ethereum, and litecoin.

Both the CME Group and Cboe Global Markets introduced bitcoin futures in December. Those contracts allow traders to bet on the future price moves of bitcoin without having to hold the cryptocurrency itself.

TD Ameritrade, which has more than $1.2 trillion in assets and 11 million retail accounts, was the first financial services firm to offer approved clients access to those bitcoin futures contracts last year. The brokerage firm executes an average 780,000 trades per day, a quarter of which are placed using mobile devices.

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