A Chicago trading firm is setting up shop in Singapore to dominate the bitcoin market in Asia
- DRW, the Chicago-based trading firm, is expanding its bitcoin trading operations into Asia.
- The firm told Business Insider it sees a huge opportunity in Asia for over-the-counter trading.
- The Asian-outpost will be based in Singapore, but will serve all of Asia and enable the firm to operate as global, around-the-clock, business.
DRW, a Chicago-based firm, is looking to set up a bitcoin trading desk in Singapore to dominate the cryptocurrency market in Asia.
The firm has been in the bitcoin game since 2014 via its division Cumberland Mining, which already operates over-the-counter bitcoin trading desks in Chicago and London.
Bobby Cho, the head of over-the-counter trading for Cumberland, told Business Insider the firm is preparing to start up operations in Singapore well-before year-end.
"Asia is a big opportunity for us," Cho said. "We dominate the market in the US and we are trying to bring that liquidity to Asia where there is tons of activity."
DRW already regularly facilitates bitcoin trades in the $1 to $5 million range with trades in the $20 to $50 range being viewed as the "gold standard" ceiling.
"We are long bitcoin with our average transaction well north of $100,000," Cho said.
In China, where retail exchanges have shut down en masse because of a crackdown by the government, the OTC business has exploded. OTC trading firms like Cumberland connect buyers and sellers off retail exchanges.
A study conducted by China's National Committee of Experts on Internet Financial Security found OTC trading has "boomed" since the crackdown began. Here's the report:
"With the liquidation of domestic ICO and Bitcoin transactions in early September, over-the-counter trading has boomed again. From the transaction data of the two platforms of LocalBitcoin and Paxful, the share of BTC-CNY over-the-counter trading in its total amount of over-the-counter Bitcoin transactions rose from about 5% to about 20%."
Cho told Business Insider the firm's strategy isn't necessarily to dominate China.
"China has always been a grey box with a lot of things," Cho said. "So I don't look at the opportunity as specifically trying to capture China."
Rather, it's about dominating the entire Asian market, according to Cho, and becoming a truly global, round-the-clock business.
"We want to provide institutional-grade liquidity to world, regardless of where you are located," he said.
Sebastian Quinn-Watson, a partner at Blockchain Global, a cryptocurrency exchange operator, told Business Insider he is very bullish on the crypto-market in Asia. Here's Quinn-Watson:
The mining companies are exploding in size in China. It is a frenzied market for M&A activity with many of the larger players acquiring smaller players. There are also a number of very large Japanese mining operations hunting for deals in China as well.
As for China, he says, it is all systems go in the OTC markets.
"The ban on exchanges has triggered an explosion in innovation in decentralized exchanges and applications for OTC exchanges," Quinn-Watson said. "Proving the technology and entrepreneurs behind it are allowing the market to live despite the sharp regulatory changes."