The FTX US cryptocurrency exchange has agreed to purchase a stake IEX Group Inc. to collaborate on technology and regulatory initiatives and expand digital asset access for both institutional and retail investors.
The deal still needs approval from competition authorities. For IEX, the exchange featured in a Michael Lewis book called “Flash Boys,” this would be its first noteworthy venture into the world of digital asset trading, as it looks to offer institutional investors exposure to digital assets.
In 2012, IEX was founded when four former Nasdaq employees (one of whom was Brad Katsuyama) decided to form their own alternative trading platform. Katsuyama gained fame in the “Flash Boys” book, the thesis of which was that the U.S. stock market is contrived to favor high-speed traders.
IEX is one of the first fully registered exchanges in the world, but it faces fierce competition from traditional stock market operators, and as a result, accounted for only 2.7 percent of equities volume in the United States in March 2022, compared to the Nasdaq’s 17%
FTX has clear expansion plans
For FTX, the newly purchased stake will be a step towards expanding its presence in the United States by targeting equities trading and institutional clients. “With this investment, we’re aligned with one of the most trusted and innovative companies in equities markets,” stated Sam Bankman-Fried (SBF), chief executive officer at FTX and FTX US, following the announcement.
Binance, a global leader in cryptocurrency exchanges, and Amun AG, a leading Swiss cryptocurrency issuance company, also partnered to launch the Binance Smart Chain (BNB) ETP on the regulated arm of the SIX Swiss Exchange.
Bankman-Fried is also interested in cryptocurrency options, swaps, and futures as part of FTX’s expansion into the US, eyeing trading volume in the US handled by rival Coinbase Global Inc., and recording growth far outpacing Binance, its closest competitor. Binance’s partner platform in the U.S. offers a limited selection of cryptocurrencies and does not support margin trading or futures trading.
“Ideally, I would want FTX to become the biggest source of financial transactions in the world,” said SBF in a recent interview.
Partnership with CoinShares
Another partnership that will help to bridge the gap between traditional finance and digital assets occurred between FTX Global and CoinShares recently. The pair will launch a physically-backed exchange-traded product called SOL ETP, that will share the rewards of staking with investors.
CoinShares wants to improve the transparency and reliability of digital assets. Through the partnership with FTX, the exchange platform will be able to provide access to institutional investors. Additionally, investors will be able to trade FTX ETPs alongside other exchanges.