Europe's Largest ETF Trader Moving Into Crypto Despite Regulator's Warning

The largest speed trading firm in Europe has jumped into the crypto markets, disregarding its regulator's warnings to consumers and institutions not to engage in crypto trading.

The Dutch Authority for the Financial Markets (AFM) has taken a cautionary stance on cryptocurrencies, saying they “discourage activities in cryptos both by consumers and professional license holders”.

Flow Traders NV - a ‘speed trading’ firm based in Amsterdam which traded $284 billion last quarter - says it is now making markets in Bitcoin and Ethereum ETNs (exchange traded notes). According to XBT Provider, a Swedish crypto ETN issuer, Flow Traders has “dramatically increased” trading volumes.

Notably, market commentators believe publicly traded notes/funds would make crypto trading more appealing for institutional investors as it is a safer and easier way to gain exposure to the exciting new asset class.

In a recent interview the Flow Traders CEO said that:

“People underestimate crypto… It’s big, and it is to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested -- we know they are because we get requests”

Dennis Dijkstra

AFM “Discourages Activities in Crypto”

Nienke Torensma, a spokeswoman for the AFM, said in a statement: “By virtue of its newness and the anonymity it potentially offers, it is very prone to abuse. Given its inability to serve the promised purpose as a currency, we don’t regard it to be an asset class.”

Fortunately for Flow Traders NV, the AFM can’t stop firms from trading regulated instruments on regulated exchanges. Flow Traders NV clearly wants to stay on side with the regulators, with Dennis Dijkstra remarking that "The biggest thing is keeping the regulators on board."

Institutional Interest for a New Asset Class

Despite ongoing criticism from many institutions such as the BIS and the Bank of England, large institutional trading firms have been entering the market even though retail interest has been ebbing since December.

“With the growing interest from institutional clients willing to invest in digital assets, I can see why so many proprietary trading businesses are now focusing on this new asset class,” said Laurent Kssis, managing director at XBT Provider.

XBT Provider is part of London-based CoinShares Ltd. As with most jurisdictions, the AFM wants a united global regulatory approach to cryptocurrencies. In this regard, Malta has been making progress while UK industry body CryptoUK has also been pushing for regulations.

With so many jurisdictions, however, drafting their own regulations - it may be some time before a unified approach is established.

Crypto Scammers Responsible for $24 Million in Bitcoin Theft Through First Half of 2020: Report

Michael LaVere
  • New Whale Alert report shows crypto scammers have raked in $24 million in bitcoin through the first six months of 2020.
  • One scammer leveraged YouTube advertising to steal $130k in BTC per day. 

Crypto monitoring service Whale Alert has published a report showing that crypto scammers are responsible for $24 million in bitcoin theft through the first half of the year, including the exploitation of YouTube advertising. 

According to the report “Chasing Crypto Criminals” published July 10, cyber-thieves are finding easy prey in the form of bitcoin and other crypto-asset investors. Whale Alert summarized its exhaustive reviews of hundreds of websites and thousands of reports of theft as “crypto crime pays. A lot.” 

Whale Alert claimed there was little risk involved for crypto-based criminals, despite the massive economic impact being imposed on victims. The report confirmed at least $38 million in bitcoin alone being stolen via scams over the past four years, excluding the use of Ponzi schemes. 

The report reads, 

Some of the most successful scams made over $130,000 in a single day with nothing more than a one page website, a bitcoin address and a decent amount of YouTube advertising.

Whale Alert outlined another scam which brought in $1.5 million over six months through promoting a fake cryptocurrency exchange. The report claims the advertisement took victims to an “amateurish website riddled with spelling errors,” before tricking users into depositing their funds. 

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