Interactive Brokers considers launching new stablecoin for customers
The deliberations come at a time when the underlying infrastructure of global financial markets is undergoing a once-in-a-generation transformation due to the proliferation of blockchain-based assets like stablecoins.
In an interview with Reuters, Interactive Brokers' billionaire founder Thomas Peterffy said the company is working on potentially issuing stablecoins, but has yet to make a final decision on how that will be offered to customers.
Interactive Brokers, which is one of the world's leading discount brokers with a market value of about $110 billion, currently has a partnership with crypto platform Paxos and is also an investor in crypto exchange Zero Hash. Through these tie-ups, Interactive Brokers offers trading in various cryptocurrencies to customers.
The popular trading platform is now working on enabling instant, 24/7 stablecoin funding for brokerage accounts, as well as supporting asset transfers for commonly traded cryptocurrencies, said Peterffy, who also sounded a note of caution on the risks of rapid widespread adoption of crypto.
"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.
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 upon the credibility of the issuer.
Stablecoins are blockchain-based tokens acting as a proxy for an asset that allow people to move money across borders without interacting with the banking system. Critics have warned that this makes them useful for criminals who want to avoid banks' anti-money laundering checks.
Online brokerage firm Robinhood recently launched a stablecoin pegged to the U.S. dollar called the Global Dollar Network through a consortium that included other crypto platforms like Kraken and Galaxy Digital. The Global Dollar Network is based around a stablecoin called USDG, which is issued by Paxos.
Interactive Brokers, which last year launched a predictions market called ForecastEx that allows investors to buy "yes" or "no" contracts in response to questions, 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 last year.
Like other brokerages, Interactive Brokers has benefited from elevated levels of trading due to market volatility this year that was triggered by U.S. tariff policy.
Its shares have surged about 47% since the start of the year, outperforming the S&P 500 Investment Banking & Brokerage index (.SPLRCINVB), opens new tab, 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 note dated July 18.
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