Exchanges

eToro managing director on what’s next for its freshly launched crypto exchange, the inevitability of hacks, and high hopes for stablecoins

Quick Take

  • eToro’s U.K. managing director, Iqbal Gandham, discusses the company’s plans for its month-old crypto exchange aimed at professional traders
  • He says the aim is to list “many” tokens, having already launched the first Chinese Yuan-backed stablecoin, with listing guidelines expected in Q2
  • Gandham praised Binance for its handling of a cyber-attack last week, noting “if you’re online, you’re going to get hacked”

It’s not easy being the new guy – even if your parent company is eToro, a global multi-asset securities broker which boasts 10 million registered users. 

But it seems eToroX, eToro’s Gibraltar-regulated crypto exchange launched last month, is not in a rush to mark its territory, opting for a staggered approach since going live, according to eToro’s UK’s Director, Iqbal Gandham.

“I’d call [April’s announcement] a medium launch. Not a soft launch as such, but we’re definitely looking to add far more features,” he told The Block in an interview in London.

“We’re pacing ourselves. Crypto has different nuances to consider. We’re learning,” he added, speaking exactly 30 days after eToroX launched its API-driven platform for professional traders in 80 countries, barring the U.S.

Indeed, there are lofty plans for this eToro miniature, with Gandham hoping it will eventually be “on par” with the main platform. eToroX has already increased its offering to over 50 trading pairs, based around the five largest cryptocurrencies (it recently delisted Dash). It is also planning a major crypto marketing campaign in September to drive up the exchange’s user-base, the size of which is said to be reflective of the firm’s second-tier on-boarding efforts.

“I’d be surprised if [numbers] are anything significant,” Gandham noted, suggesting only a handful of eToro’s millions of users have migrated over to the new exchange. The company declined to give specific data. 

As for why eToro chose to launch a standalone crypto platform despite offering crypto brokering itself since 2014, Gandham explains there was a need to keep up with traders’ varied requests. Such demands – especially around listings – are already rolling in fast to eToroX from token projects and traders alike. In response, Gandham said the exchange is “looking to launch many more tokens,” hoping to go beyond “established” cryptoassets once they have a listing procedure in place. He expects this will be finalised by the end of this quarter, seemingly unfazed by the weight of a task that is arguably core to an exchange’s direction.

“It’s not a difficult thing to do to put a document together,” he said. “It’s a work in progress,” he added, noting that the key criteria for tokens accepted on to the platform will be ones with ‘natural’ liquidity. “We don’t want to list everything.”

So for now, eToroX is playing it safe, choosing this week to add four additional native stablecoins, including eToro Ruble (RUBX) and eToro Yuan (CNYX); the latter of which is believed to be the first Chinese stablecoin in circulation.

These additions should come as no surprise given eToro is so bullish on stablecoins. Gandham explains that fiat pegged-tokens add a layer of efficiency to crypto trading, allowing users to hedge their exposure by locking in a fixed price while providing an avenue for quick, 24 hour, less volatile trading as “it’s all digital.” It’s a logic that is key to the exchange’s narrative given its native stablecoins cannot be redeemed for fiat.

The other next step is hiring. Gandham says that eToroX is unlikely to join the likes of Bakkt or Coinbase in hiring heavyweight trading veterans anytime soon, but adds that they’ll reconsider depending on the market and the state of the platform.

Finally, Gandham takes a realist, matter-of-fact approach about the security threats facing nascent crypto exchanges.

“Do banks get hacked? I don’t know. But there’s fraud. And e-commerce sites definitely do, yet we don’t continuously report on that,” he said. “If you’re online, you’re going to get hacked.”

Still, as for eToroX’s own approach, he said it’s committed to keeping at least 90% in cold storage, which is offline and is, in theory, more secure. As for the threat on the remaining 10%, it seems eToroX may take a leaf out of Malta-based exchange Binance’s book, should the nightmare become a reality.

“Look, Binance replenished all the lost funds. What more could a customer ask for?” Gandham said.