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dpa-AFX NEWSTICKER (Product extract)
(Updated background from May 03, 2021 with additional information on Bitpanda and Stuttgart Stock Exchange)
FRANKFURT (dpa-AFX) - The signs for cryptocurrencies and their trading venues have never been better than they are now: As a result of corona restrictions and in search of the thrill at home, private investors are increasingly investing in riskier assets and also have so-called coins for themselves discovered - but the stock exchanges for the comparatively young asset class now want to do more and expand their business to include other options such as stocks. They are banking on the increased interest of younger investors, who are currently increasingly interested in stocks, driven by the high price gains in some US tech stocks.
As with digital currencies, private investors speculate on particularly high profits within a very short time. Young adults in particular seem to be interested in cryptocurrencies and the blockchain technology that is often behind it. "None of my students are still interested in stocks, they all only talk about crypto currencies," says Philipp Sandner, head of the blockchain center at the Frankfurt School of Finance. The institute deals with the effects of blockchain technology on companies and the economy.
The top dog Bitcoin, for example, has seen a remarkable increase in value. Since the Corona low in mid-March 2020, the value of a Bitcoin has increased by around fifteen times by the beginning of May. And even after the downward slide of the past few days, a Bitcoin is still worth many times more. In the case of the Dogecoin, initially thought of as a joke, the development is even steeper: If a Dogecoin was worth around 0.72 euro cents in mid-January - i.e. less than a single cent - the price soared to more than 30 cents. The course was mainly driven by statements by Tesla boss Elon Musk and speculation.
Crypto exchanges and trading venues also want to earn money from the significantly increased trading volume - such as the BSDEX, behind which the Baden-Württemberg stock exchange is. For the managing director of the technical operator of the Stuttgart Stock Exchange Digital Exchange (BSDEX), Max von Wallenberg, crypto currencies are no longer pure speculation. "In addition to stocks or ETFs, cryptocurrencies are also an asset class that is currently becoming more and more established."
BSDEX is currently offering end customers and institutional investors the sale of four coins, and by the end of the year there should be twice as many. For comparison: On the crypto exchange Coinbase, based in San Francisco, which recently hit the headlines due to its spectacular IPO, 56 different coins are currently tradable.
The BSDEX boss does not want to be put off by the size difference. "When it comes to investing, trust is important and the Stuttgart Stock Exchange has long been a well-known brand," argues von Wallenberg. According to its own information, BSDEX is Germany's first regulated trading center for crypto currencies. In addition to it, only the much larger competitor Kraken has a European license as a "multilateral trading system". Von Wallenberg also emphasizes that all the requirements of the money laundering guidelines are met.
In addition to the two large crypto currencies Bitcoin and Ethereum, which, according to the CoinMarketCap monitoring platform, make up almost two thirds of the global market capitalization of crypto currencies amounting to 1.9 trillion euros, BSDEX is already thinking about other products: "In the medium term, I can also trade with me Imagine derivatives, "says von Wallenberg.
Deutsche Börse wants to make its institutional customers aware of cryptocurrencies in a different way. With so-called Exchange Traded Products (ETP), the company wants to bring OTC trading into a regulated environment. "Crypto-ETPs are easier for institutional investors because they already have access to Deutsche Börse and trading is secured by a clearinghouse," says a company spokesman. In March, these accounted for almost one billion euros out of a total of 23 billion euros in sales in the ETF / ETP segment. In the first quarter, a Bitcoin ETP was the most traded product in the area, it said.
The ETP, which map the price developments of Bitcoins, Ethereum, Bitcoin Cash and Litecoin, are intended to serve as a unique selling point for the trading center. "There are already too many trading venues for business with coins," it says. However, certificates and derivatives could also be added to the trading offer, the spokesman says. "The crypto market is of strategic importance for Deutsche Börse. That is why we will continue to expand our offerings in this area." At the beginning of May, the Stuttgart Stock Exchange announced that it would offer Exchange-Traded Notes (ETN) on the two cryptocurrencies Cardano and Stellar.
The Austrian competitor Bitpanda is one step further: since mid-April it has been offering not only crypto currencies but also the option of investing in "stocks and ETFs". Bitpanda Stocks promises that its customers can trade shares around the clock - even at times when trading in those shares whose price development is to be replicated is closed. For this, the company takes a commission of up to three percent.
However, the customer does not actually buy a share or an ETF, but instead concludes a derivative contract with Bitpanda. This means that he is neither in the possession of a real share in the tech company nor can he exercise rights such as participating in the general meeting. In addition, Bitpanda itself points out that in the event of insolvency of the stock exchange, the products are not subject to an investor compensation system or deposit protection. However, the Austrians advertise with a pledge agreement when purchasing products from Bitpanda Stocks, with which the risk of a total loss in the event of insolvency is to be reduced.
In addition, with this type of equity investment, as with other providers or similar forms of investment, the question arises of how these new investment opportunities are to be taxed correctly. Another example of how crypto trading venues are currently trying to create new investment opportunities for their customers is the provider Binance. Most recently, the company attracted attention with so-called Tesla tokens. Binance customers can buy a cryptographic counterpart of a real Tesla share or just fragments of it.
These investments are also reminiscent of derivatives: Investors do not invest in a company, but only participate in the development of the underlying share. A first reprimand followed promptly: at the end of April, the Bafin warned the company because there was a sufficiently well-founded suspicion that Binance had published the share tokens without the required prospectuses.
Regardless, this could be a foretaste of the further development of crypto exchanges and trading venues. "If I were to work at a traditional exchange, I would be concerned," says Blockchain Center director Sandner. It is also clear to him: Coins are just the beginning. "The traditional financial industry is being shaken out of its slumber," he says.
In the long term, Sandner sees great opportunities for crypto exchanges to compete with the tried and tested financial market: "Coinbase is able to win hundreds of thousands of new customers every day. No other bank in the world can do that." As already done, these could then be offered other financial products in addition to crypto currencies. However, in order for these to be traded in accordance with the law, trading venues would have to be regulated. For investors, this would have the advantage that cryptocurrencies would find even greater acceptance among the population
--- By Khang Nguyen, dpa-AFX ---
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