How forex brokers have embraced the crypto revolution

The cryptocurrency industry has been one of the most revolutionary forces of the last 10 years in the global financial markets. At some point, it looked like forex trading was going to lose its clout as a global leader in online trading activity. 

Forex trading industry has managed to evolve with advances in technology over the decades. It did again, by embracing cryptocurrency trading. In doing so, it retained its title as the most popular method of investing in the financial markets. 

Forex trading accounts for more than $5.3 trillion in daily turnover globally. This value will only grow as more trading instruments come into the mix. The industry began with simple currency trading. But over time, commodities have been added to the mix. Market indices joined as well. Now, we also have stock CFDs in nearly every brokerage platform.

Forex brokers now offer crypto trading via CFDs

Cryptocurrency trading via CFDs is now part of the list of available trading instruments on most brokerage platforms. In fact, to be rated as a top broker globally, CFD trading is almost a requirement. 

For instance, forex brokerage reviews and rating site Financeeo ranks UK-based IG Group among the world’s leading forex brokers. It highlights the diversity of CFDs offered on the broker’s platform as a primary factor in their rating. That includes bitcoin among other cryptocurrencies.

One major advantage of this method of trading cryptocurrencies is that traders can easily open and close trades either direction of the cryptocurrency without necessarily owning it. This provides a unique opportunity to profit from the volatility of cryptocurrency prices.

Another advantage that comes with trading cryptocurrencies via forex brokerage platforms is the ability to capitalize on the leverage that brokers provide to their traders. Some provide leverage of up to 1:500. This allows traders to gain access to higher investment capital relative to their account balances. 

Forex brokers embrace blockchain, the technology behind cryptocurrencies

Blockchain technology is the real force behind the success of the cryptocurrency industry. This technology introduced a revolutionary concept in the financial market, which allows several parties to securely share, access and verify records of transactions immutably.

This technology is now being implemented in general banking and brokerage services. The likes of HSBC lead a chain of financial market service providers in the early adoption phase. 

The successful implementation of blockchain technology in the global currency markets will improve the quality of services offered. That includes improved trading spreads and the speed at which trades are executed. In an interview earlier this year, an HSBC executive told Reuters that the adoption of blockchain technology could lead to reduced forex trading costs. 

The bank’s chief operating officer, Mark Williamson said that the company’s forex trading division, which processes about 3,500 and 5,000 trades a day on its “FX Everywhere” system, settling trades worth $350 billion had already processed more than $250 billion worth of trades on its blockchain platform. Williamson added that “the more participants that you have joining the HSBC shared permissioned ledger and the ecosystem, the more efficient we’re going to become in providing services to our clients.”

More trading instruments

In hindsight, successful implementation of blockchain-based foreign exchange trading platforms could open doors for more trading instruments to be added to forex brokerage platforms. As the market continues to grow, tokenization will be key in some of the industries like real estate.

(Featured image by DepositPhotos)

—

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.