SoftBank-backed startup to offer retail crypto trading

Stock brokerage DriveWealth has entered the cryptocurrency industry, launching two subsidiaries designed to allow its partners to offer retail investors crypto trading.

DriveWealth, a New Jersey-based company backed by Japanese tech giant Softbank, is valued at $2.85 billion.

DriveWealth CEO Bob Cortright told CNBC that the spreads traded on Coinbase are "unsustainable" and that traders are forced to trade, driving the cryptocurrency space forward. He continued:

“With the regulatory environment around cryptocurrencies tightening and clients focusing more on spreads and efficiency, we cannot continue to survive in a world where we can charge 200 basis points on a transaction.”

Coinbase, the largest U.S. cryptocurrency exchange, charges up to 4.5 percent of the transaction value and charges spread fees on its platform. According to the company's financial report at the time, 88% of the exchange's $1.2 billion in total revenue in the third quarter came from these transaction fees.

DriveWealth recently acquired another crypto startup, Crypto-Systems, which made the new crypto offering possible. With this acquisition, DriveWealth has launched a subsidiary, DriveLiquidity, which will provide liquidity to partners looking to invest and trade crypto assets.

DriveWealth has also launched DriveLiquidity as an affiliated crypto exchange. It plans to offer an API (application programming interface) to partners, allowing retail investors to trade bitcoin and ethereum.

Cortright said that more and more companies in various fields are requesting access to cryptocurrency liquidity in order to allow their users to trade or earn cryptocurrency rewards. He continued:

“Even large, well-established e-commerce companies are finding that when they survey their customers, a significant percentage want to own some cryptocurrency.”

DriveWealth faces a real uphill battle if it wants to compete with Coinbase. As of the third quarter of 2021, the exchange has more than 68 million users. Additionally, Coinbase has a market capitalization of $39 billion and an enterprise valuation of approximately $36.5 billion.

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