Brazilian Firm Launching OTC Bitcoin Exchange

| Publish date: 04/22/2018 (Last updated: April 22, 2018 01:37 PM)
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Brazil’s biggest investment broker, XP Investimentos, may be launching its own Over the Counter (OTC) Bitcoin Exchange. While the company itself has not made any announcements to this effect, one of the local news agencies did some digging.

Brazilian news agencies are reporting that XP Investimentos is behind the establishment of a new company called XDEX, putting in around $7.5 million worth of capital into this new venture.

According to rumours, XP had earlier registered a new startup under the name XP Coin Intermediacao. Then, in 2017, when the cryptocurrency market was at its highest ever, the company then altered its name to XDEX and raised another $1.5 million in the capital. Then, in February 2018, the company got another $6 million in funding.

XDEX and OTC Trading

According to a source who wished to remain anonymous told the local news agencies that XDEX was actually planning to launch its own OTC market, focusing on major fiat currencies as well as Bitcoin. This means that the startup is looking at roping in heavyweight investors through this venture.

The concept of an OTC exchange is different from a traditional cryptocurrency exchange such as Kraken or GDAX. In a regular exchange, all trades are listed in an order book, which is subject to the minute-by-minute changes of currency rates in the market. This means that while in the process of filling an order, the price of that crypto could be slipping.

In OTC exchanges, companies like XP would actually act like middlemen. They would connect those with large sums of cash with those who have a large cache of Bitcoin tokens. The advantage to this kind of trading is that people can lock in large amounts of cryptocurrency and cash without having to worry about constant market changes. XP would make its money by taking a commission for brokering the deal.

According to one of the reporters, Claudio Rabin reported that he was informed by an executive at one of the biggest crypto exchanges in Brazil that XP was already involved in OTC trades.

XP’s Growing Focus on Cryptocurrencies

After Brazil’s number one bank, Unibanco Holding, bought out a 49.9% stake in XP for $2 billion, the company has focused more on the cryptocurrency market. The brokerage registered the “XP Bitcoin” brand with the National Institute of Industrial Property in September 2017. Then, November, the firm hired crypto-expert Fernando Ulrich as the company’s chief economist for cryptocurrencies.

So far, Brazil has taken a rather hands-off stance with regard to cryptocurrency regulation. However, now, with so many of the country’s biggest financial giants joining the fray, the government will have to rethink its policies on cryptocurrencies.

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