DriveWealth Expands Into Crypto Trading Space

Brokerage firm DriveWealth, a New Jersey-based FinTech, is getting into cryptocurrency trading, CNBC reported Monday (Feb. 7).

The startup, which is backed by Japanese holding company SoftBank, is planning to launch two subsidiaries to carry out crypto trades, while also acquiring a crypto firm, according to the report.

DriveWealth has described its mission as democratizing investment, giving customers first-time access to U.S. markets and the ability to begin investing with as little as $1. Last year, the company was valued at $2.85 billion following a $450 million Series D funding round to help it expand.

Read more: New Funding Drives DriveWealth to $2.8B Valuation

Now, that expansion seems to involve the acquisition of Crypto-Systems, which will let DriveWealth begin offering bitcoin and ethereum trading to partners this spring, a move CEO Bob Cortright told CNBC will bring greater transparency to the digital asset space.

“In the crypto space right now, it’s still the Wild West — prices are all over the place,” Cortright said in the report. “There’s very little price discovery, and there’s little consistency with spreads. We want to change that.”

He said he believes that, just as with retail participation in foreign exchange (FX) markets in the past, trading costs for crypto will fall as regulators become more involved and competition increases, according to the report.

“It’s unsustainable,” he said, per the report. “I mean, customers trading on Coinbase, trading across this transaction spread, it’s too much. As regulatory environments tighten around crypto and customers get more focused on spreads and efficiency, we can’t continue in a world where you can charge 200 basis points on a transaction.”

Last year, DriveWealth formed a partnership with the financial data network Plaid designed to give customers of both firms simplified investment account funding.

See more: DriveWealth Partners With Plaid for Frictionless Investing

The partnership lets DriveWealth and Plaid customers authenticate their end users’ bank accounts with Plaid and obtain tokens that offer fast and secure bank funding source verification through the DriveWealth application programming interface (API).