Integrating cryptos into trading platforms the professional way: Exclusive interview with Gold-i CEO Tom Higgins

Recently, Gold-i CEO Tom Higgins, a senior financial technologist with vast experience across London’s exchanges and in retail FX liquidity management R&D, engaged several senior multi-asset electronic trading industry executives during an exclusive symposium in Australia, in which he took a detailed look back over 6000 years in the history of money and financial transactions, deducing that cryptocurrency bears resemblance to ancient methods of payment, and that it is a natural progression rather than anything revolutionary, which is why, when used in correct context, it must be taken seriously.

Whilst it is most certainly the case that virtual currency, largely led by Bitcoin, has become an almost mainstream and staple component of the research and development strategy of many financial technologists globally, especially the database which contains a hash pointer as a link to a previous block, a timestamp and transaction data, known as ‘blockchain’ that is intrinsically part and parcel of virtual currency generation and sustenance, it can certainly be fair to say that the ‘crypto’ focus that has emerged recently represents an exponential raising of attention.

The recent craze that has engulfed virtual currency – now fashionably referred to as ‘cryptocurrency’, a likely manifestation of a reference to the blockchain structure’s continuously growing list of records, called blocks, which are linked and secured using cryptography, can really even very conservatively be described as an unprecedented and somewhat impulsive rally.

In order to dissect what aspects of blockchain technology and the virtual cryptocurrencies that it underpins are actually viable and sustainable subjects for development that may become accepted integral components of the financial services topography of tomorrow, it is more than prudent to consider the perspectives of those who actually spend their careers in the R&D centers of the major executing venues and institutions of Chicago and London, as this is the voice of experience and reason.

With the demand for finely honed solutions which integrate the ability to gain access to liquidity and hedging as well as risk management solutions for brokerages wishing to offer cryptocurrency CFD trading, the seasoned specialists of this industry are required to provide such equally specialist technology.

Today, FinanceFeeds spoke in detail to Gold-i CEO Tom Higgins to look closely at its CryptoSwitch technology and how it benefits brokerages wishing to engage their clients with sustainable cryptocurrency CFD product offerings.

 Gold-i has integrated its Crypto Switch™ with leading cryptocurrency market maker, B2C2 to enable brokers to hedge their clients’ cryptocurrency CFD trades. What’s the significance of this announcement?

It has become increasingly clear over the last few months that strong demand from the market is not for physical cryptocurrencies but for CFD cryptocurrencies. The regulators have clarified that cryptocurrency CFDs will be treated as existing CFDs and this greatly simplifies the process for a regulated broker to add these new asset classes to their portfolio of products which they offer to clients.

We have been working with cryptocurrency CFD market makers for a number of months and were excited to be able to release our first cryptocurrency integration with B2C2, creating a robust CFD cryptocurrency solution for brokers.

There’s such strong demand for cryptocurrency CFDs that we have another 10 cryptocurrency market makers in the pipeline to integrate with our Crypto Switch™ – our award-winning product which integrates pricing and direct trading from cryptocurrency exchanges and liquidity providers. The announcement we made with B2C2 is significant as it means that brokers who have our Crypto Switch™ can now hedge their clients’ cryptocurrency CFD trades.

What are the caveats to consider when striking liquidity deals with cryptocurrency exchanges and providers on assets such as Bitcoin, Ethereum, Litecoin and Bitcoin Cash and how can the Gold-i Crypto Switch™ take control of this for brokerages to ensure they get a full range of aggregated feeds and can provide a stable trading environment in cryptocurrency vs fiat pairs?

It is very important to ensure the financial stability of your cryptocurrency CFD market maker because you will be bilaterally trading with them and will almost certainly be required to deposit a substantial amount of money with them.

The analytics tools built into our Crypto Switch™ enable a broker to monitor their position and therefore manage the risk with their market makers. Cryptocurrency CFDs are very illiquid compared to major FX pairs and therefore it is necessary to have a number of aggregated market maker feeds into Crypto Switch™.

Our Crypto Switch™ also enables brokers to monitor the reliability of the feeds using liquidity provider dashboards. This is key as it is a new market and the cryptocurrency market makers are not yet as well proven as FX market makers.

It has been difficult to price fiat CFDs for some time, and even more difficult to clear them due to their nature as an off-exchange futures contract. Do you think the peer to peer nature of cryptocurrency removes this obstacle or adds to it? 

Blockchain technology is ideally suited to cleared markets, particularly with the smart contract facilities that Blockchain 2.0 offers. Gold-i is actively looking at how this exciting new technology can help with clearing cryptocurrency CFDs and reduce bilateral risk.

What new markets and currency pairs will Gold-i Crypto Switch™ concentrate on? Japan – as per your partnership with B2C2 iterates – is a very cryptocurrency-friendly market. Can this be emulated elsewhere in places where large exchanges are less prevalent and the market understanding of how to hedge crypto trades is less developed?

The Crypto Switch™ is driven by customer demand. We have started with the most popular top ten cryptocurrencies and will then add more according to demand.