Sam Bankman-Fried’s FTX cryptocurrency exchange signalled its determination to expand “across all asset classes” as it launched a US equities trading service that will accept payments in some stablecoins as well as US dollars.
The US arm of FTX set the stage for the move by quietly buying a regulated broker-dealer last year. Starting Thursday, it said “select US customers” chosen from a wait-list set up in February will be able to use FTX US to buy stocks and exchange traded funds, as well as digital assets.
The expansion underscores the scope of Bankman-Fried’s ambitions and his willingness to enter financial services that are more tightly regulated than the crypto markets where the 30-year-old FTX founder has made billions.
“Our goal is to offer a holistic investing service for our customers across all asset classes,” said Brett Harrison, FTX US president.
“We would like to become the ‘everything exchange’ and the ‘everything app’ when it comes to financial services and fintech in general,” Harrison added. “We are using the lessons learned in crypto to improve upon and, in some cases, disrupt traditional market structure.”
The announcement came only days after it was revealed that Bankman-Fried had paid $648mn for a 7.6 per cent stake in Robinhood, an online retail brokerage that also deals in stocks and cryptos. He said in a filing that he bought the shares because they were an “attractive investment” and that he had no intention of “influencing the control” of the broker.
Harrison said FTX could be seen as a competitor of Robinhood, having spent “a long time” studying its business model to “see if there are elements to emulate or improve upon”.
For now, FTX Stocks, as the new offering is known, will charge no fees or commissions and will not accept payments for its order flow, as Robinhood does. Asked how the operation would make money, Harrison said, “It’s not an essential part of our business for this to be profitable on day one.” He said that could change, depending on how the service is received.
To distinguish itself, FTX US said it would accept payment for stock purchases in “fiat-based stablecoins” including USD Coin and Binance USD. This would exclude so-called algorithmic stablecoins such as TerraUSD. Based on its rules, Harrison said FTX also would not accept such well-known stablecoins as Tether for these payments.
FTX said it is offering the securities trading service through its broker-dealer, now called FTX Capital Markets, in partnership with Embed Clearing, a provider of “white-label” brokerage services to brokers.
FTX’s equities foray comes as it is seeking permission from the Commodity Futures Trading Commission, a US derivatives regulator, to bring its brand of automated risk management to the leveraged futures industry, using computers to perform functions now entrusted to brokers.