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New Trading Platform for Bitcoin, Other Digital Currencies

  • Carolyn Weaver

The digital currency known as bitcoin, a peer-to-peer form of encrypted payment that exists only virtually, has been clouded recently by incidents of theft and fraud. But two firms, the Ireland-domiciled Perseus Telecom and the New York company Atlas ATS, have announced plans to broaden the appeal of bitcoin and other digital currencies by offering institutional investors a global private network with top-level security.

Executives at Perseus Telecom, which provides secure ultra-high-speed telecommunications and business connectivity services, and Atlas ATS, a digital currency marketplace, said that if their new platform succeeds, online currency will quickly become a valuable new way for the world’s largest investors to trade and store assets.

Shawn Sloves, chief executive officer of Atlas ATS, contrasts the new platform with current trading methods, which he called “bitcoin 1.0.”

“The problem before was [that it was] typically deployed on web-based infrastructure, it was very retail-focused, and it didn’t have a lot of the regulatory compliance security that institutions are accustomed to trading on,” he said. "The new platform will attract investors with the advantages of digital currency minus those drawbacks. It allows you to move money instantaneously around the world without having to deal with borders,” he said, adding that he used it recently to move a large sum of his own money from Russia to the United States.

“On my own server, I was able to transfer the entire value of that on bitcoin within three minutes,” he said. “It’s global, it’s borderless; it’s also a public ledger, so it’s shared by everybody and ownership transfer is publicly stored, and shows the rights of the owner of that coin,” he said. “But we also see it from a trading perspective as a major revolution, because today, traditional asset classes like equities can take three days to settle. We can transfer security ownership instantaneously.”

There are 180 digital currencies already in existence, Sloves said, with about six major ones. Bitcoin is the largest, but he said the new platform will trade others as well. He called it a “disruptive” innovation, with the same potential to remake business as did the Internet in the 1990s, by offering real-time transfers of assets both for investors and e-commerce companies - who will pay much smaller fees than those charged by current online pay services like Paypal.

“We expect over the next five years at least a fivefold increase in commission dollars generated from just U.S.-dominated bitcoin,” Sloves said, further predicting that commissions would exceed $1 billion.

Andrew Kusminsky, the chief operating officer of Perseus Telecom, said his company’s wireless networks are already built within major trading venues in cities around the world.

“We’ve got network assets in places like Brazil, all over Europe, all over Canada, all over Asia, and some of the most sophisticated customers are already on these networks,” he said. “Adding bitcoin and Atlas into those existing locations, tied together with our wireless infrastructure, makes perfect sense for the most sophisticated prop shops [proprietary trading groups] that care about every nanosecond being utilized across the network."

And he asserted that it would be hack-proof.

“You have to have the right technology partners protecting this data as though it is actual currency behind a vault inside a bank,” he said. “It’s something that should be easily protectable.”

There are skeptics, however, who doubt that bitcoin is ready for primetime. Some note that anyone can set up a digital currency. What would happen to the value of bitcoins (currently valued at $650 a “coin”) if another currency gained a larger following?

The Financial Regulatory Industry Regulatory Authority (FINRA), which regulates securities firms in the United States, recently issued a report addressed to individual investors that characterized bitcoin as “risky,” and “volatile,” noting that it was susceptible to fraud, theft, and hacking, and was used by some engaged in crimes such as drug dealing and money laundering.

Sloves and Kusminksy view such issues as “bitcoin 1.0” concerns, and said that large investors, like those they hope will use their platform, can only do business in compliance with federal rules. Sloves said they expect that federal financial regulators will soon step in with guidelines and rules for trading in bitcoin, too, “whether it’s the SEC (Securities and Exchange Commission) or the CFTC (Commodity Futures Trading Commission).”

As for the plethora of digital currencies already existing, he said, different ones offer different advantages, and do not pose a threat to bitcoin. Even nations may establish their own digital currencies, Sloves noted.

“We know that Canada has already issued its own digital currency and is trying to find a way to get it more widely adopted. There is a company in Iceland giving out digital coins to people, since currency in Iceland has been devalued to nothing, and they need a general currency across the country. So, it would make sense that governments would use it, too,” he said.