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Startup funded by Softbank is launching a retail crypto trading platform

DriveWealth wants to compete with Coinbase as a crypto liquidity provider by allowing its partners’ retail clients to trade crypto on their platforms.

DriveWealth, a stock brokerage firm, has entered the cryptocurrency market by establishing two subsidiaries that will enable its partners to offer crypto trading to individual clients.

DriveWealth is a $2.85 billion startup situated in New Jersey that is financed by Japanese tech giant Softbank.

Traders forced to trade across a “unsustainable” transaction spread on Coinbase, according to DriveWealth CEO Bob Cortright, prompted the move into the crypto industry. He went on to say:

“We can’t continue in a world where you can charge 200 basis points on a transaction as regulatory conditions tighten around crypto and clients become more interested on spreads and efficiency.”

Coinbase, the largest crypto exchange in the United States, charges fees of up to 4.5 percent of the transaction amount plus a spread fee. According to the exchange’s financial report at the time, transaction fees accounted for 88 percent of its $1.2 billion in total income in Q3.

DriveWealth’s recent acquisition of Crypto-Systems, a distinct crypto firm, has enabled the additional crypto products. DriveWealth formed its DriveLiquidity subsidiary as a result of the acquisition, which will provide liquidity for partners looking to invest in and trade crypto assets.

DriveWealth has recently formed DriveDigital, a cryptocurrency exchange business. It intends to give its partners API (application programming interface) access to allow retail investors to trade Bitcoin (BTC) and Ethereum (ETH).

According to Cortright, a growing number of businesses in a variety of areas are asking access to crypto liquidity so that their customers can trade or receive crypto incentives. He went on to say:

“Even the established, massive e-commerce firms are discovering that a large number of their customers want to possess some crypto.”

DriveWealth faces a significant uphill struggle if it wants to compete with Coinbase. As of Q3 2021, the exchange had over 68 million users. Coinbase (COIN) has a market capitalization of $39 billion and an enterprise value of $36.5 billion.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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