FTX, a cryptocurrency exchange, revealed in a press release that it will soon allow traditional stock trading alongside its crypto services. The functionality is now available to a limited number of users in the United States, but it plans to expand to more traders in the coming months.
According to FTX, it would provide commission-free trading and access to “hundreds of US exchange-listed products,” including common stocks and ETFs. Customers will be able to fund their accounts using credit card deposits, ACH transfers, and wire transactions. FTX also claims to be the first exchange to allow customers to fund their accounts with fiat-backed stable coins like USDC. Stablecoin prices aren’t intended to vary as much as other cryptocurrencies because they’re tied to a currency or commodity, but a recent drop in the general crypto market has left some stablecoins floundering.
Instead of adopting the payment for order flow (PFOF) technique used by Robinhood and other exchanges, FTX intends to route orders directly through the Nasdaq exchange. Brokerages are compensated for sending orders to market makers under PFOF, which opponents believe may create a conflict of interest because brokers may desire to route orders to institutions that enhance their earnings. Following the GameStop stock spike last year, the practice came under criticism.
Users can also trade stocks and cryptocurrency on Robinhood, the Block-owned Cash App, and Public.com; adding FTX to the mix will allow it to compete directly with each site. FTX founder Sam Bankman-Fried stated earlier this month that he had purchased a 7.6 percent interest in Robinhood, making him the company’s third-largest shareholder. Bankman-Fried stated in his 13D filing that he had no plans to acquire the company at this time, but as the report points out, this type of form is often filed by an investor wanting to purchase more shares of a company or conduct a takeover.
