Interactive Brokers Group is considering launching its own stablecoin for customers, joining a growing number of major financial firms betting on the digital token boom as U.S. crypto regulations become more favorable.
These deliberations come at a time when the fundamental infrastructure of global financial markets is undergoing a once-in-a-generation transformation, driven by the proliferation of blockchain-based assets like stablecoins.
In an interview with Reuters, Interactive Brokers’ billionaire founder, Thomas Peterffy, confirmed the company is exploring the possibility of issuing stablecoins but has not yet finalized how this will be offered to customers.
Cryptocurrency trading
Interactive Brokers, a leading discount broker with a market value of about $110 billion, already offers cryptocurrency trading through partnerships with crypto platforms like Paxos and Zero Hash, in which it is also an investor.
The popular trading platform is now working to enable instant, 24/7 stablecoin funding for brokerage accounts, as well as supporting asset transfers for commonly traded cryptocurrencies, Peterffy said. He also sounded a note of caution on the risks of rapid and widespread crypto adoption.
“It’s basically hard to grasp its fundamental value. If we see people adopting it and ascribing a value to it, I’m okay with that, but I’m still not convinced,” said Peterffy.
Blockchain-based tokens
Among the options being considered, the Greenwich, Connecticut-based firm could allow customers to use stablecoins issued by other financial institutions to fund their accounts, depending on the credibility of the issuer.
Stablecoins are blockchain-based tokens pegged to an asset, typically a fiat currency like the U.S. dollar. They allow people to move money across borders without interacting with traditional banking systems. Critics, however, have warned that this makes them useful for criminals who want to avoid anti-money laundering checks.
Interactive Brokers is not alone in its crypto ventures. Online brokerage firm Robinhood recently launched a stablecoin pegged to the U.S. dollar, called the Global Dollar Network, through a consortium that includes other crypto platforms like Kraken and Galaxy Digital. The Global Dollar Network is based on a stablecoin called USDG, which is issued by Paxos.
Largest U.S. trading platforms
Interactive Brokers, which launched a prediction market called ForecastEx last year, is one of the largest U.S. trading platforms, with about 3.87 million customer accounts at the end of June—a jump of 32% from the previous year.
Like other brokerages, Interactive Brokers has benefited from elevated levels of trading this year, triggered by market volatility. Its shares have surged about 47% since the start of the year, outperforming the S&P 500 Investment Banking & Brokerage index, which has risen roughly 20% during the same period.
“We view the two innovations (prediction markets and crypto investments) as an effective hedge to any disruption in the firm’s core equity, futures, and derivatives businesses,” Morningstar analysts said in a July 18 note.
