New Bitfinex Platform to “Eat the Lunch” of Stock Exchanges

Bitfinex, the Hong Kong-based cryptocurrency exchange, has announced the launch of Bitfinex Securities, a new platform for trading tokenized equities and bonds. With this move, the exchange will be entering the world of traditional finance, with CTO, Palolo Ardonino saying:

“We are basically trying to eat the lunch of London Stock Exchange and other traditional stock exchanges.”

Could this be a sign that the gap between crypto and traditional finance is shrinking and that stock exchanges should expect greater competition?

Bitfinex Unveils Platform for Trading Tokenized Equities & Bonds

Bitfinex’s new trading platform, Bitfinex Securities, will allow traders to access and trade tokenized securities. The company will also enable small and medium-sized (SMEs) firms to list their tokenized bonds, funds, or equities – as well as allowing them to raise capital. 

Currently, some crypto exchanges offer public stock token trading; digital versions of equities with their value pegged to an underlying share. However, Bitfinex Securities would be a departure from this by instead listing bonds, equities, or funds of private companies, which would enable them to go public via a tokenized issuance.

The Crypto and Finance Gap is Shrinking

Bitfinex Securities marks the latest move by crypto exchanges to offer financial services. Prior to this, a number of exchanges have been using stock tokens to provide their customers exposure to securities and shares of big companies.

As more crypto firms go public, more institutional investors are finding new opportunities to indirectly invest in cryptocurrencies. Coinbase was the first major crypto exchange to go public earlier this year, allowing investors to buy exposure to cryptocurrency markets on Wall Street for the first time. 

Subsequently, the company behind USDC, Circle, announced plans to go public on the NYSE. Now, following other crypto firms, Binance.US aims to address its regulatory concerns and go public by 2024.

Nevertheless, it is worth mentioning that uncertain regulations pose a significant challenge to crypto firms that want to dive into traditional finance. For instance, in July, numerous US states requested that BlockFi stopped offering BlockFi Interest Accounts (BIAs), claiming such accounts should be treated as securities that need to be registered before operating. 

However, due to the risky nature of cryptocurrencies regulators such as Senator Warren claim BIAs are not identical to bank-issued savings accounts — revealing regulatory uncertainty in the space.

Moreover, challenges like the rollout of CBDCs, environmental concerns around crypto mining, and the overall adverse stance held by regulators could restrict crypto firms from entering spaces previously held by traditional finance.

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Do you think more crypto exchanges would follow suit and strive to provide their customers with some form of exposure to stocks and bonds? Let us know in the comments below.