[THE INVESTOR] Cryptocurrency is often said to be in its Wild West stage as crypto investors are largely exposed to scams, frauds and manipulations, such as pump and dumps. It is largely because the exchanges are not regulated as strictly as other traditional non-crypto ones.
So far, crypto investments have also been limited to investing directly in digital currencies and participating in initial coin offerings at best, compared to traditional investment segments where investors can bet on an array of different assets and commodities, such as gold, oil, and market indices.
EMX, a Palo Alto-based derivatives exchange platform developer, aims to bring more diversity to the crypto investment scene by enabling investors to take long or short positions on commodities, crypto futures and stock market indices.
EMX CTO Craig Austin
“There are some crypto derivatives exchanges that offer futures contracts on some of the top coins, such as Bitcoin and Ethereum, but investors cannot trade equities and other currencies like euro or yen,” EMX CTO Craig Austin told The Investor in a recent interview.
“We will be the first to offer all those things on one platform.”
EMX’s futures exchange and clearing house platform makes it possible for users to trade derivatives, such as commodities, crypto coins and equities, with a token, also named EMX.
The platform, built on blockchain technology, will make its official debut in September when the company plans to hold a trading competition worldwide.
As the process to get a license in the European and North American regions is being prolonged, the platform will be first available in Singapore and Korea by the end of this year.
The exchange is designed to make a level playing field for all investors, large and small, by adopting the so-called batch auction system to reduce volatility, according to the firm.
The auction system, which executes an accumulation of orders simultaneously, hampers the attempts of high-frequency trading, an investment method often deployed by deep-pocketed investors and institutional banks to make a profit in an extremely short period of time. HFT undermines stability in the financial markets.
“In the existing financial markets, the fast trader tends to get the best prices, but in the auction system, there is no benefit of speed as everyone in the auction gets the same price,” the CTO said.
Transparency is another benefit offered by EMX, he said, as all transactions on the exchange are recorded on the blockchain.
Touching upon the problems of the current crypto exchanges, he pointed out scalability and interoperability as some of the problems they face at the moment.
“They are too fragmented right now. You cannot transfer value across exchanges,” Austin said.
He also added regulators will have to figure out how to regulate the industry and come up with more strong measures to improve stability in the overall crypto market, which is tainted by scams and market manipulations.
By Kim Young-won (firstname.lastname@example.org)