Capital markets News

SBI acquires cryptocurrency trading firm B2C2

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Yesterday  B2C2, a UK-based cryptocurrency institutional market maker, announced it was acquired by SBI Financial Services, an SBI Holdings subsidiary. 

Following a July investment of $30 million for a minority stake, SBI has increased its stake to 90% after gaining clearance from the UK’s Financial Conduct Authority (FCA). Apart from the UK, B2C2 has a presence in the United States and Japan and also offers derivatives.

As an over-the-counter (OTC) liquidity provider, most of B2C2’s clients are regulated brokerages, exchanges, banks and fund managers.

“B2C2 has an exceptional reputation for its world-class products and services, superb technology and valuable client base,” said Yoshitaka Kitao, President and CEO of SBI Holdings. “Their vision, expertise and offering complement SBI’s, and we look forward to working in partnership as we expand our footprint across the global markets.”

SBI’s VC Trade subsidiary started using B2C2 in September and SBI says its trade volumes have increased ten times since then. Meanwhile, since the July investment, B2C2 claims its own volumes have quadrupled.

Will Tether touch the mainstream financial system?

Along with numerous announcements last week, the institutional take-up of cryptocurrencies is ramping up. However, one cause for concern is the ongoing use of the Tether stablecoin as the primary ‘currency’ for trading pairs. The stablecoin has never had a full accounting audit and the New York Attorney General is investigating whether the stablecoin’s funds were allegedly used to cover up losses at crypto exchange Bitfinex. 

It’s possible that the coin may currently be fully backed as claimed, but at one point that ‘backing’ included ‘loans made by Tether to third parties’ including affiliates – a fact acknowledged by Tether for a time. This should be a major cause of concern. It was one thing when the cryptocurrency community relied on Tether, but it’s another if it’s financial institutions as Tether’s market capitalization now hovers around $20 billion.

This latest news follows the recent announcement that SIX and SBI will be collaborating for a digital asset joint venture in Singapore. In other news last week, U.S. insurer Mass Mutual made a $100 million investment in Bitcoin and multiple banks announced their entrance into cryptocurrency trading and custody. They include Standard Chartered and Northern Trust for custody, BBVA for accredited investor trading and custody in Switzerland and DBS Digital Exchange is targeting the same group in Singapore.

However, the likes of DBS Digital Exchange will not be using Tether in a client facing way, whereas B2C2 most certainly does.