Institutional investors and traders in Europe might soon have more opportunities to invest in bitcoin. Globitex, a bitcoin exchange, announced that its subsidiary NexPay UAB has been granted an Electronic Money Institution (EMI) license that is valid throughout the Eurozone. (See also: How To Invest In Bitcoin Futures.)
Circle, a bitcoin payments company which has since pivoted to mobile payments, was issued an EMI license in Britain last year. But it had to establish a banking relationship with Barclays to facilitate conversion to fiat currencies. According to Liza Aizupiete, co-founder and managing director at Globitex, NexPay UAB will not need intermediaries, such as banks, to process transactions. “With our EMI license, we can function as a bank ourselves by settling EUR payments directly with the central bank,” she said, adding that the development was “huge for the bitcoin ecosystem because it is the first of its kind in the industry.”
In an interview with Bitcoin magazine, Jon Matonis, executive director of Bitcoin Foundation and Chairman of Globitex, listed drawbacks of cash-settled bitcoin futures contracts. These include the possibility of price index gaming and margin requirements that could wipe out potential gains from bitcoin’s volatility. Globitex plans to distinguish itself from the likes of CME and CBOE by offering bitcoin-settled futures contracts. Both CME and CBOE offer cash-settled contracts, meaning that transactions involving bitcoin futures are settled using fiat currency.
Globitex is running an initial coin offering (ICO) to raise funds for scaling its operations to a spot and derivatives exchange.“We will be offering this capability to traders, because as a bitcoin exchange we are custodians for bitcoin,” said Aizupiete.
According to her, recent developments have forced regulators in Europe to acknowledge demand for cryptocurrency exchanges. “Providing a regulatory framework for cryptocurrency service providers on the fiat ensures AML compliance and an orderly functioning of the future economy,” Aizupiete said.
Globitex has grand ambitions.
“We want to link the cryptocurrency to physical world commodities and create a healthy money market lending environment for price discovery, arbitrage and international trading in bitcoin,” said Aizupiete. “The more bitcoin-linked asset classes there are, the more it will be used as a medium of exchange and a unit of account.
Currently, bitcoin exchanges are fragmented and spread out across the globe. According to Cryptocoincharts.info, there are 124 active bitcoin exchanges in the world. The overall effect of multiple trading venues is a thinning out of bitcoin liquidity across these exchanges.
According to Aizupiete, investors should expect more bitcoin volatility in the future. Currently, bitcoin’s market cap is 1.2% of gold’s market cap,” she said. “Therefore, bitcoin has enormous potential for price appreciation.” (See also: Could Bitcoin Futures Help Limit Volatility?)