London-based start-up Coinfloor is unveiling a fresh market for bitcoin that targets institutional investors as investment banks and hedge funds start developing interest in the virtual currency.
The company, which was registered last year, will set up an over-the-counter bitcoin market. It will partner with a trading firm that is regulated by the Financial Conduct Authority to ensure financial institutions can handle bulk orders for the bitcoin. The silent partner will assume the role of “market maker”, meaning doing the job of acquiring and holding bitcoin to ensure it is easily available when investors need it.
“We’re seeing a lot of demand… Most of the Bitcoin liquidity is happening off books – it’s a similar problem to the equities market, where you see a lot of these orders happening on dark pools,” said Mark Lamb, the chief executive of Coinfloor, according to the Independent.
“We are seeing growing interest from institutions, especially hedge funds. We’ve had interest from some investment banks in Europe as well,” said Tom Robinson, the director of the UK Digital Currency Association.
Coinfloor joins other UK start-ups such as Elliptic and BitStamp that are seeking to raise London’s profile and the global hub of the Bitcoin industry, following the bankruptcy of Mt. Gox, which until February was the world’s largest bitcoin exchange.
Already some U.S. investors such as Fortress Investment, a hedge fund, disclosed early this year that it purchased $20 million worth of bitcoins and that it sunk $10 million in BitStamp. Elliptic, a bitcoin storage business associated with Robinson, also manages the virtual currency for U.S.-based Falcon Global Capital, which is the world’s first investment fund dealing with Bitcoin. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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