One of the main problems of banking and financial professionals is that they do not have direct access to cryptocurrency. Both legislative and technical limitations exist here.
In order to resolve this problem B2Broker launched B2BX, an aggregator of cryptocurrency liquidity for margin trading and exchange trading, as well as for liquidity distribution for brokers. What are the main aspects of the aggregator operation?
It shall be noted that the aggregator is not fully operative at the moment. But after the Initial Coin Offering (ICO) is held and tokens are released B2BX will receive resources necessary for the majority of plans that will help to start operation in all three main directions.
Exchange Trading and Exchange with Physical Delivery
Japanese legislation that is highly loyal towards cryptocurrency might help here. The thing is that on April 1, 2017 a law was enacted in Japan allowing Japanese companies dealing with cryptocurrency to use Bitcoin and Ethereum for mutual payment.
B2BX is going to trade and exchange using a company with JFSA, the Japanese license. However, in such case quite strict requirements are applied to companies dealing with cryptocurrency, such as:
- license allowing cryptocurrency operations;
- reserve resources in an amount not less than $100 000;
- regular reporting to financial regulatory authorities, as well as external audit by revenue authority;
- office in Japan. Such a company shall have two directors, both of them in Japan.
B2BX applies another method for this kind of activity – a company with Vanuatu license (VFSC). It is planned to use more licenses in the future, such as CySEC (Cyprus), FCA (UK) and ASIC (Australia). Margin cryptocurrency liquidity is going to be distributed via partnership network of brokers with a corresponding license.
Margin liquidity is allowed now. It means that brokers got the permission from main regulators; therefore they provide a possibility to their retail customers to trade cryptocurrency with leverage. Trading is performed with the use of CFD contracts for cryptocurrency without real exchange of assets. CFD contract is a derivative instrument that can be quoted by a broker on his own or transmitted from liquidity providers.
It means that if an account is nominated in fiat currency, a person purchasing bitcoin in fact acquires CFD contract, in other words – the price for bitcoin. Accordingly, the balance nominated in currency at the broker, will change depending of bitcoin price.
It’s much easier, if a broker has a market maker license. In such case broker can quote this derivative instrument by himself. If a broker doesn’t have such license, the process is a bit different. In this case liquidity is taken from a liquidity provider and further it covers all orders at the external counterparty.
B2BX broker allows brokers to connect their trading platforms to cryptocurrency liquidity. Now the aggregator receives liquidity from the 5 biggest exchanges.
After the ICO is performed 35 relatively small brokers and 5 biggest will make it possible for customers to trade cryptocurrency. Further the company is planning to aggregate requests from brokers and companies along with market development and creation of the largest aggregator of cryptocurrency liquidity.
B2BX is going to provide their customers with the easiest process of cryptocurrency exchange to currency and to cryptocurrency. They are doing everything necessary for this including the acquisition of all significant licenses. Furthermore, it is planned to open offices in all legislations important for financial operations, promotion of agent-based model and much more.