TD Ameritrade Backs Regulated Cryptocurrency Exchange

One of America’s largest brokerage firms is betting big on the continued growth of cryptocurrencies. To that end, TD Ameritrade has announced it is backing a new platform that gives retail traders the ability to access both bitcoin spot and bitcoin futures.

TD Ameritrade Enters Crypto

The U.S. brokerage firm, which controls $1.2 trillion in assets, has made a strategic investment in ErisX, a regulated crypto exchange offering access to crypto spot and futures markets. According to CNBC, which broke the news on Wednesday, the exchange will be fully regulated by the U.S. Commodity Futures Trading Commission (CFTC). However, certain product offerings are pending approval.

ErisX will be backed by Virtu Capital, which provides high-speed trading infrastructure.

In addition to bitcoin and bitcoin futures, the new platform will allow traders to purchase Ethereum, bitcoin cash and Litecoin at spot prices. The narrow selection of cryptocurrencies mirrors that of Coinbase, a San Francisco-based exchange with more than 13 million users. Although Coinbase offers one additional cryptocurrency – Ethereum Classic – and is planning to add more, it only supports spot trading and not futures.

“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,” JB Mackenzie, managing director, told CNBC.

“We listened to our customers – what we continued to hear was that they wanted access to trade digital currency products.”

Crypto Markets are Here to Stay

TD Ameritrade’s crypto venture is the latest in a series of efforts by traditional players to establish a foothold in the enigmatic sector. Banks, hedge funds and stock exchange operators are all pivoting toward cryptocurrencies and blockchain despite the yearlong downtrend in prices.

The latest effort by TD Ameritrade is especially important given the broker’s focus on retail traders.  Until now, it has been assumed that the next great crypto bull market will be driven by institutional capital. This belief isn’t unfounded; after all, retail interest in crypto has dwindled over the past six months as the novelty of the market wore off. But a platform like ErisX could attract an entirely different segment to cryptocurrency: experienced stock and ETF traders looking to diversify into other markets.

As CNBC noted in its report, TD Ameritrade currently has about 11 million users who collectively execute 780,000 trades per day. As ErisX is rolled out, investors should keep tabs on whether existing Ameritrade users will be provided seamless access to the new platform.

Developments like ErisX give long-term holders of cryptocurrencies more reason to be optimistic about the future. With the exception of Tom Lee and a few others, most market participants have come to terms with the idea that an imminent bull market is not in the cards. In the absence of eye-popping returns, investors can still take solace in the fact that crypto adoption is growing in all the right circles.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi