The world’s second-largest cryptocurrency trading platform, FTX, recently drew attention when it said that its US subsidiary will offer commission-free stock trading. It is a pioneering movement; Although we have seen some major financial platforms and fintechs including Robinhood, Block and Sofi launch crypto wallets, trading or other services, FTX is the first crypto platform to venture into other types of financial services and assets.
The move makes sense, as with cryptocurrency trading volumes down due to recent market losses and volatility, it is wise for cryptocurrency trading platforms to explore other sources of income and ways to grow their user base. . But more importantly, in the long run, it signals the arrival of cryptocurrencies as a more integrated part of the financial services sector, with many of today’s cryptocurrency-only platforms becoming one-stop shops for multiple services and classes of services. active.
Therefore, in order to not only survive the current market downturn, but also to position themselves as more comprehensive financial service providers in the long run, crypto trading platforms must either make changes, or stay on the sidelines.
Offer more assets, including stocks and futures
Although FTX continues to search for a stock trading partner, and it is unclear what type of stock trading the platform will ultimately offer, the move should set an example for other crypto platforms.
Investors, including ordinary consumers and retail traders, are holding more and more stocks and cryptocurrencies. That means that dedicated cryptocurrency platforms should add additional assets, such as stocks and futures, to serve more of their users’ needs. With the demand for investment in shares already existing, offering shares is one of the most efficient ways to capture more value from existing users, while adding value to your services in the eyes of the users themselves.
Platforms should view stocks and other assets not as competitors to cryptocurrencies, but simply as part of the bigger financial picture that they help their users access. A more diverse set of services reflects the rapidly changing personal finance sector, especially as government bodies consider crypto regulation and more established big players, including Fidelity, which recently said it would offer bitcoin as part of its plans for retirement savings, start offering cryptocurrency and crypto-related services. Just as financial firms that resist crypto today are seen as being left behind, today’s crypto platforms that offer no other assets will also be left behind.
Adopt smart business tools
Crypto trading platforms have been among the leaders in offering advanced trading tools to retail investors. Long used by institutions like hedge funds, advanced tools like algorithmic trading are key to helping investors navigate volatile markets. Academic studies have found the volatility of crypto markets to be especially well-suited for algorithmic trading, and these can outperform traditional buy-and-hold strategies.
These advanced trading tools aim to not only deliver higher returns, but also provide convenient and personalized services for users, allowing them to automate trading and set the risk levels of their choice. Crypto platforms that want to stay relevant need to offer these advanced tools not only for cryptocurrencies, but also for other asset classes such as stocks.
Additionally, algorithms and other AI-based technologies can also help maintain balance and seat risk levels not just in one asset, but in someone’s overall portfolio. For example, systems could automatically divert funds to different asset classes, including stocks and cryptocurrencies, based on market conditions, offering an overall smart investment toolkit. This can be a valuable way for platforms to differentiate themselves in a crowded market, where perks like free transactions are no longer enough to attract users.
Explore creative savings and wealth building programs
Crypto platforms looking to diversify should also consider including savings and wealth management mechanisms. It is true that cryptocurrency trading has long been something that has a lot to do with the excitement of the present moment. But this is changing as cryptocurrencies become more integrated into people’s financial lives. A savings element could become increasingly important as users transfer more of their money to these platforms to invest in other assets such as stocks.
Building on the creativity and technological know-how that earned them rapid growth and success, especially among younger consumers, today’s crypto platforms can explore different possibilities for savings or wealth management. Programs could include rounding up money invested in transactions to the nearest dollar and then funneling the rounded amount into a longer-term investment. Along with trading platforms, there are endless possibilities for creative savings or long-term financial planning schemes. With fears of a recession or economic downturn looming, this is an especially appropriate time to provide savings or other long-term investment options. The platforms could also offer carbon offsets and other sustainability efforts.
Regardless of what happens to the value or volumes in the crypto markets, crypto platforms will benefit and better serve their customers by adding new services and features. Not only will it help expand the business today, but it will also prepare platforms for the future, when cryptocurrencies are simply a part of the broader financial world.