Last month Disruption Banking reported that OANDA, one of the world’s leading online trading groups, has acquired cryptoasset firm Coinpass. The exchange was founded in 2018 and is one of the few such companies to be registered with the Financial Conduct Authority (FCA). What explains OANDA’s acquisition and its entry into the crypto market?
Gavin Bambury, the CEO of OANDA, told Disruption Banking that the UK generally remains an attractive market for the company because “the UK is still in the top ten largest economies in the world.”
“It’s also a big market for investing and trading as a whole. Across the UK, there are lots of established and reputable online retail trading companies,” Bambury added. “It has an established history of being very well-regulated, and of course it is a major market for traditional finance: foreign exchange, indices, share trading, and more.”
He also noted that the UK is an increasingly appealing market for cryptocurrencies. In April, reports suggested that the UK has the fastest-growing crypto industry among the top five digital asset markets. Between June 2020 and July 2021, the UK was the leading European country for crypto activity, with $170 billion of digital assets traded. As Bambury noted, a recent FCA report showed that crypto ownership in the country has doubled.
“When you look at figures like these and combine that with the fact that the UK is a global economy, a home for traditional finance and growing on the crypto side, it just makes it an attractive market across the board,” Bambury said. He also added that, particularly because the industry appears to be destined for more stringent regulation, the UK’s regulatory environment is another bonus.
“The FCA is a globally respected regulator. It’s set a high bar for approving crypto companies and ensuring that the companies are compliant businesses. Coinpass has passed that high bar. This makes the overall picture particularly compelling for the UK,” he said.
OANDA’s move into crypto markets comes at a time when the industry is facing much higher levels of regulation. The collapse of Three Arrows Capital and Terra Luna last year, as well as the spectacular crumbling of FTX and arrest of Sam Bankman-Friend, has prompted regulators around the world to consider how best to manage the space. In the States, the Securities and Exchange Commission has launched a high-profile crackdown on digital asset firms.
Bambury agrees that “where we’re moving is towards a much, much more stringent regulatory environment,” but said that “to be frank, that doesn’t concern us – quite the opposite actually.”
“OANDA operates as a globally regulated business. We’re regulated by all the main nine regulators in global jurisdictions, including the FCA. The fact that crypto is going to be regulated doesn’t scare us. We actually see it as a competitive advantage,” he said. “Without regulation you’re not competing on a level playing field – you’re competing with people that operate to an entirely different standard. Regulation will allow us to leverage our strengths.”
Bambury also noted that regulation could be positive for the wider industry. “In the long-run I think regulation will help significantly in driving confidence in the underlying asset class,” he said. “Regulation could also attract more institutions – we’ve seen the start of this with Grayscale’s ETF application and BlackRock looking to put together an ETF as well – which will increase confidence amongst retail investors.”
Coinpass and OANDA both have strong track records in terms of how their technology is perceived on the market. In August, OANDA won the award for “Best Low-Cost Broker” in the UK, while OANDA TMS in Poland has previously won “Brokerage House of the Year.” Coinpass has won similar awards for being the best cryptoexchange in the UK. To what extent will there be interchange between the two companies when it comes to their backend technology or will they remain separate entities?
Bambury said that “it’s going to be a bit of both – naturally there’ll be some integration of technology over time. But really I think what is more important – because OANDA and Coinpass have different technology stacks: one tackles traditional finance, the other tackles digital finance – is that we’ve got the ideas and expertise to allow Coinpass to learn from our experiences.”
“You can learn a lot about where digital finance may be headed by thinking about traditional finance principles and what happened in that industry,” Bambury added. “Spreads are quite wide today, for example, but they’ll get tighter. As particular asset classes like ETFs come in, there will be more concentration in venues. These are all things that happened in traditional finance, and we can help Coinpass prepare for that happening in crypto too.”
The Coinpass acquisition is clearly a big step for OANDA to take and represents. Bambury has previously said that “the acquisition signals the start of an exciting new phase of growth for OANDA, creating the opportunity for a truly global B2B reach.” But are any new acquisitions or projects in the pipeline? While he would not be drawn on specifics, Bambury said that “we are always looking for something new.”
“Whether its new functionality, a new asset class, or new markets and regions, we are always thinking about the new ways in which we can expand.”
Author: Harry Clynch
#OANDA #Crypto #UK #FCA #Coinpass #DigitalAssets
