Exchanges

Wallet provider Blockchain rolls out crypto exchange, claiming to be one of the ‘fastest’ in the market

Quick Take

  • Blockchain.com, the world’s largest crypto wallet provider, has launched a crypto exchange
  • Dubbed The PIT, the exchange claims to be one of the “fastest” in the world 
  • The exchange, however, is not focused on the U.S. market

The world’s largest cryptocurrency wallet provider Blockchain.com has ventured into the crowded cryptocurrency exchanges market, and it is hoping that speed will be its selling point.

The offering – dubbed The PIT – has been in the works for over a year, according to the firm. And it will compliment its wallet business, which allows “more than 40 million” users around the world to store, send, and receive a number of digital assets, including bitcoin. 

Built in stealth mode, The PIT will go up against the long list of participants going after the sliver of cryptocurrency trading volumes. Earlier this year, eToro also launched its own regulated crypto exchange, focusing on markets other than the U.S. Recently, institutional aimed exchanges such as ErisX and Seed CX launched spot cryptocurrency markets. 

Blockchain is hoping speed will help it stand out. While other crypto exchanges host “millisecond” matching engines, The PIT plans to host  a “microsecond” one, Nicole Sherrod, head of trading products at Blockchain, told The Block. 

The firm also expects the sheer size of their wallet business will serve as a buoy for the exchange. Already, its wallet clients send millions of dollars worth of trading flows to external exchange venues, will keep those flows within its platform.

“Folks are logging in to transfer their funds to outside exchanges. This will help us pull them deeper into our ecosystem,” Blockchain CEO, Peter Smith, told The Block.

To start, it will offer lower fees than some other participants, including Coinbase and Gemini. 

The Block reported back in January that Blockchain was exploring the launch of an exchange business. It was being looked at, for instance, by former ITG executive Jamie Selway, who departed the firm as its head of institutional markets after just five months of joining.  His focus was on OTC and custody. 

Recently, two more executives left Blockchain, including Goldman alum Breanne Madigan, who was head of institutional sales and strategy at the firm, and former UBS software developer Daniel Cullender, who played a key role in building out Blockchain’s liquidity aggregation system. 

Still, the project is staffed by a number of other ex-Wall Streeters, including Sherrod, who joined the firm from TDAmeritrade, as well as Tom Haller, previously the chief architect for trading systems at the iconic New York Stock Exchange.  

Charles McGarraugh, who spent 16 years at Goldman Sachs, is the firm’s current head of institutional markets. 

Is speed really important?

To be sure, Blockchain isn’t the only firm focusing on speed. 

One of the oldest crypto exchanges, Bitstamp, was also recently looking to increase its speed of order matching by 1,200 times, in partnership with exchange technology provider Cinnober. LMAX Digital, a subsidiary of London exchange group LMAX, also operates a high-frequency, low latency cryptocurrency exchange venue. 

Still, insiders have told The Block that speed isn’t a top priority for most investors in the market. One exchange executive bluntly noted that speed is “not that important right now.”

Earlier this year, CoinRoutes CEO Dave Weisberger, a former high frequency trading executive, told us that most of the traders are not ready for high frequency/low-latency matching engines, but rather are more interested in services tied to block and over-the-counter or OTC trading.

As for The Pit, the new exchange is available to users in over 200 countries, with 26 trading pairs initially, including BTC, ether (ETH), bitcoin cash (BCH), litecoin (LTC), and stablecoins Tether (USDT) and Paxos Standard (PAX). It supports deposits, withdrawals, and fiat-to-crypto trading in the U.S. dollar, euro and sterling pound. Blockchain said it plans to “rapidly” add more trading pairs and cryptocurrencies in the near future.

The exchange will not be U.S.-focused, Smith told The Block, as it has “millions and millions” of users outside of the country. “We are 30 to 40% emerging markets. We have a very active customer base in Venezuela, Ukraine,” Smith told The Block recently.

This post has been updated to clarify Cullender’s role when he was on Blockchain’s institutional team.