Apparently a lot of crypto traders have no idea of the difference between legitimate exchanges and OTC dealers... Definition, https://www.imf.org/external/pubs/ft/fandd/basics/markets.htm Some key points: " Trading on an exchange An exchange centralizes the communication of bid and offer prices to all direct market participants,... They are closely linked to the clearing facilities through which post-trade activities are completed for securities and derivatives traded on the exchange. ... The result is a level playing field that allows any market participant to buy as low or sell as high as anyone else as long as the trader follows exchange rules. Trading over the counter Unlike exchanges, OTC markets have never been a “place.” They are less formal, although often well-organized, networks of trading relationships centered around one or more dealers. Dealers act as market makers by quoting prices at which they will sell (ask or offer) or buy (bid) to other dealers and to their clients or customers. That does not mean they quote the same prices to other dealers as they post to customers, and they do not necessarily quote the same prices to all customers. Moreover, dealers in an OTC security can withdraw from market making at any time, which can cause liquidity to dry up, disrupting the ability of market participants to buy or sell. " Noticed that Broker/Dealers must register with FINRA to operate in the US. I imagine all the Forex/CFD shops have done it and they seem to be surviving just fine. https://www.finra.org/registration-exams-ce/broker-dealers Is this the main reason these cryptocurrency broker/dealers are pretending to be "exchanges"? Just to avoid the FINRA registration? Maybe to distance themselves from the relatively negative reputation of the forex/CFD industry?
Yeah ok @Sig found your alias. Do you even trade crypto? Where can I buy spot as retail on a regulated exchange?
About a week ago one of them had a mini crash and cleared out the order book, aka loaded up on cheap coins. If you know just how shallow the order book is and where the stop orders are AND you have access capital, what keeps you from occasionally clearing it both up and down? Nothing...
In my experiance. Most of the amounts are very small retail amounts for larger transactions, we would hedge using another exchange or onboard marketmakers. Not a problem is proper risk management is applied.
Hey, today in the news, Coinbase has to pay 6.5 MM fine for doing just this: Of course botrunning is slightly different then taking the other side, but you got the picture. And since there is no central crypto exchange where the order should be sent, all orders are executed in house, the question is, just who is on the other side? Well, I guess the bots.... I have this sci-fi idea that humankind goes extinct, but the exchanges keep going on and buying and selling stocks, crypto, wheat, oil, etc. until the energy eventually runs out.