Over the past year, there’s been a whole lot of hubbub about TD Ameritrade’s dealings with Bitcoin and cryptocurrency.
In 2018, the retail brokerage, which services over 11 million clients that hold over $1 trillion worth of assets, backed a crypto upstart going by Eris Exchange (ErisX).
This led to mass speculation about what plans the firm has for cryptocurrency. While nothing material has been announced yet, the chief executive of TD Ameritrade recently revealed that his firm is seeing “heightened” interest from its clientele for digital assets.
TD Ameritrade CEO Knows His Clients Want Bitcoin
The launch of Facebook’s Libra, coupled with the total resurgence in the cryptocurrency market, has awoken something in the public. As Tim Hockey, the soon-to-depart chief executive of TD Ameritrade, told The Street in an interview, “clients are asking for it.” By it, he means Bitcoin and other digital assets.
As to why this trend is occurring, Hockey looks to the mass media coverage that Libra has received, which has materialized in comments on cryptocurrencies from global regulators and investors — most notably Donald Trump.
He adds that the sudden bout of renewed interest in cryptocurrencies can also be attributed to “active investors”, most of which are looking for alternative asset classes to outperform the indices and the ever-decreasing yields of government bonds and other portfolio staples.
Just as an aside, it is important to note that TD Ameritrade’s platforms, including Think or Swim, does already support the CME’s Bitcoin futures.
But, the vehicle is only offered to clients with a certain level of wealth/account balance and qualifications, which makes sense, especially due to the CME’s institutional focus.
What makes sense would be for TD Ameritrade to give its clients access to Bitcoin and other cryptocurrencies, maybe Ethereum, through ErisX. As Steven Quirk, TD Ameritrade’s Global Head of Trading & Education, told CNBC last year in the wake of the ErisX investment:
“I think the appeal for us is that [ErisX has] the biggest players in the Bitcoin space from a market making standpoint, both DRW and Virtu here, and you also have Cboe in a partnership with NEX. So you have people that are very well versed in this space and what we’re bringing to the table as a strategic investor is a pretty deep understanding of our 11+ million retail clients and what they look for when it comes to a product.”
Notably, ErisX has recently bagged a license from the Commodity Futures Trading Commission to become a derivatives clearing organization, giving it the ability to launch certain Bitcoin products in the near future, when it launches that is.
While there are some expecting for ErisX to launch shortly, Hockey doesn’t seem ready to delve right in just yet. He told The Street that when it comes to cryptocurrencies, he wants to ensure that TD Ameritrade takes a “crawl, walk, run approach”, presumably to avoid any regulatory scrutiny that flies their way as the discussions around Libra develop.
What’s weird is that individuals like Charlie Lee, the founder of Litecoin, has begun to spot facets of TD Ameritrade’s platforms that indicate that the firm is testing trading for Bitcoin. Also, the firm has been reported to have launched a Digital Assets division, just as Fidelity did last year.
Not the Only Player On the Block
TD Ameritrade isn’t the only one trying to tackle this space. Bloomberg reported earlier this year that its sources tell them that E*Trade, one of TD Ameritrade’s primary competitors, may soon be launching Bitcoin and Ethereum trading.
The insiders added that the firm is looking for a proper custody solution.
Also, Bakkt has recently launched its futures product for a select group of beta-testers. While the contract is much more institutional-centric, the New York Stock Exchange-backed platform is expected to soon launch Bitcoin vehicles that will appeal to a retail audience.