The U.S. affiliate of crypto exchange FTX is rolling out zero-commission stock trading as part of a bigger bet that retail investors will want to see their crypto and stock investments in a single place.
FTX U.S. will offer no-fee brokerage accounts, commission-free trading, and market and company data, the company announced Thursday. For now, the new service is limited to a small number of U.S. users.
As people become more familiar with cryptocurrencies as investment assets, and as investing services become more easily accessible to a growing number of retail investors, FTX is counting on users growing weary of managing various apps and accounts for their financial activity, according to FTX U.S. President Brett Harrison. The company is hoping to become a one-stop shop for retail investors, he said.
“If they want to invest in stocks, they’re not going to want to have to split their savings between two different apps, or have to move money around between two different accounts,” Harrison told CNBC’s “Crypto World” on Thursday.
“They’d like to be able to have one holistic experience where they can invest in multiple asset classes from a single app and experience. That’s what we’re hoping to provide by combining stocks and crypto into the same application for our user,” he said.
The product, called FTX Stocks, will initially route orders to Nasdaq through its clearing firm, Embed, Harrison said, adding the company will not receive any payment for order flow, citing “a growing retail concern around transparency and fairness around order routing.” The back-end payments that brokers receive for directing clients’ trades to market makers came under scrutiny last year during the Robinhood-GameStop trading frenzy, which brought more retail investors into the market.
Instead, FTX Stocks is more of a customer-acquisition play, Harrison said. While FTX U.S. may initially lose money on stock trades, it hopes to recoup those losses in other ways, including through its crypto-trading service and selling its basic crypto services to other brokers and financial services providers.
“To start, this isn’t going to be a profitable endeavor for us,” Harrison said. “Our goal is to be able to add this additional service for our customers to help bolster our existing business.”
Customers will have the option to fund their accounts with fiat-backed stablecoins like USDC in addition to normal dollar deposits through wire transfer, ACH or credit card. There will be no minimum required balances for customers to maintain and users will be able to trade some securities fractionally.
The news, which was first reported by The Wall Street Journal, comes as the S&P 500 teeters on the edge of a bear market. Stocks — and cryptocurrencies — have been in a brutal sell-off for most of this year. The Nasdaq Composite suffered its worst month in April since 2008.
FTX U.S. made the announcement a week after the company’s owner, Sam Bankman-Fried, bought a minority stake in Robinhood, making him the third-largest shareholder and fueling speculation that he’s interested in acquiring the whole company. Shares of Robinhood, which got its start in stock trading and has seen strong customer demand for crypto, have been falling and last week hit an all-time low, about 77% below its July 2021 IPO price.
This week, Robinhood revealed plans for its own bigger push into crypto.
FTX U.S. also joins fintech brands like Block’s Cash App, SoFi and Public in offering trading in both stocks and crypto. Big crypto rivals like Coinbase and Binance do not offer stock trading, with the latter ending its equities product last year.