TradeZero, an online securities brokerage that offers free stock trading software, has launched what it claims is the first “dark pool” exchange for bitcoin to allow institutional traders to execute large bitcoin trades outside of the bitcoin exchanges, according to Reuters.
Off-exchange trading can represent 40 percent of all U.S. stock trades.
TradeZero also provides commission-free trading of stocks, equities, index options, and ETFs.
Fund Accounts with Bitcoin or Fiat
TradeZero can fund accounts with bitcoin or any national fiat currency, according to the company’s website. All non-USD sent will convert into USD at the market exchange rate. Digital currency transfers do not incur a cost.
Jered Kenna, the founder of the now-defunct Tradehill bitcoin exchange, has partnered with TradeZero in the venture. Tradehill announced its closure in 2012, citing regulatory problems and the loss of $100,000 in a dispute with a payment processor, according to arstechnica.
Daniel Pipitone, director of TradeZero, said the company wants to offer non-U.S. investors with the same access and discounted commissions that U.S. traders have. Customers will have access to commission-free digital currency trading that will enable them to make significant purchases without moving the market price significantly.
Why Dark Pools?
Kenna said dark pools are necessary to allow larger players to move significant bitcoin trades without upsetting the market. He said it will bring stability to the market.
A minimum opening balance of $10,000 is needed to trade on the dark pool exchange, Kenna explained.
TradeHill offered a dark pool, Kenna added, but it was never able to fund a bank to serve as a custodian for fiat currencies, euros, and dollars arising from bitcoin trades.
TradeZero will use a pre-existing bank for fiat currencies, he noted. He did not wish to name the bank.
TradeZero has partnered with Bitgo for wallet security. Bitgo insures and stores digital currency.
Featured image from Shutterstock.