Cryptocurrency exchange FTX will soon enable traditional stock trading alongside its crypto offerings, the company announced in a press release (via The Wall Street Journal† The functionality is currently available to a select few users in the US, but the plan is to roll it out to more traders in the coming months.
FTX says it will offer commission-free trading with access to “hundreds of U.S. publicly traded securities,” including both common stocks and ETFs. It allows customers to add funds to their accounts through credit card deposits, ACH transfers, and wire transfers. FTX also says it is the first exchange to let users fund their accounts with fiat-backed stablecoins, such as USDC. While the price of stablecoins (theoretically) doesn’t fluctuate as much as other cryptocurrencies because they are pegged to a currency or commodity, a recent dip in the overall crypto market has left some stablecoins struggling.
FTX plans to route orders directly through the Nasdaq exchange, rather than using the order flow payment method (PFOF) used by Robinhood and other exchanges. PFOF entails that brokers receive a fee for forwarding orders to market makers, a process that critics say could create a conflict of interest as brokers may want to forward orders to institutions that increase their profits. The practice came under scrutiny after the GameStop stock surge that occurred last year.
“With the launch of FTX Stocks, we have created a single integrated platform for retail investors to easily trade crypto, NFTs and traditional stock offerings through a transparent and intuitive user interface,” said Brett Harrison, FTX’s US president in a statement. †
Robinhood, the Block-owned Cash app and Public.com also allow users to trade stocks and crypto – throwing FTX into the mix allows it to compete directly with any platform. Earlier this month, Sam Bankman-Fried, the founder of FTX, announced that he has purchased a 7.6 percent stake in Robinhood, making him the company’s third-largest shareholder. In Bankman-Fried’s 13D filing, he said he had no plans at this time to acquire the company, but because the WSJ points out that this type of form is usually submitted by an investor who wants to buy more shares of a company or make an acquisition.