Local crypto trading options open up with arrival of Aussie exchange Swyftx
Australian cryptocurrency exchange Swyftx has entered the New Zealand market, boosting by 70% the coin currencies able to be traded through a local operator.
The Queensland-based cryptocurrency exchange claims it processed nearly $3 billion worth of digital currency on its platform in May, up from $120 million just a year ago. That staggering growth rate is mirrored among some of the existing local cryptocurrency platforms, such as Easy Crypto.
In July, the largest local crypto trading platform, Easy Crypto, said that after three years in operation it had processed $1 billion in currency trades and had grown 1000% in the last year. The largest crypto trading operator locally, it now has 100,000 customers.
Cryptocurrency trading has become popular with Kiwis and particularly younger investors, in the face of the low interest rates and a subdued NZX. Swyftx chief executive, Alex Harper, estimates the New Zealand market for digital assets is worth $210 million.
Harper said Swyftx had chosen New Zealand as its first country of expansion due to the regulatory parity between the two countries.
"What we have seen throughout the region is a rapid maturation of cryptocurrency in recent years," he says.
"We have around 5,000 New Zealanders already using our Australian platform and we know that increasing numbers of Kiwis are looking for secure, low-cost exchanges to buy and sell digital assets.
"We are also seeing significantly more institutional investors turning to crypto as a means of hedging against global economic instability," he adds.
Swyftx CEO, Alex Harper
Taking a punt on altcoins
The wider range of currencies able to be bought and sold via Swyftx will appeal to those looking to take a punt on emerging coins before they appreciate significantly in value. One such coin, Cardano (ADA) which was developed by a co-founder of Ethereum, Charles Hoskinson, has exploded in popularity this year and now ranks third by market capitalisation (US$89 billion) behind Ethereum and Bitcoin.
Swyftx operates differently from local crypto trading platforms which don't hold clients coins.
"Existing NZ exchanges work by simply booking a trade with them. What this means is that you send them the money for a cryptocurrency and they send you the coin. It is basically just a pass-through of funds," says Harper.
"When our exchange launches, local crypto users will be able to hold an account in NZ dollars on the platform and make deposits easily through bank transfer - giving them the ability to trade in and out of different coins more easily."
Holding coins on behalf of customers has its advantages. But it also increases the risk that an exchange could be compromised and coins stolen, as happened with the Christchurch-based exchange Cryptopia in early 2019.
Cryptopia collapse a warning
Easy Crypto's chief executive and co-founder, Janine Grainger, told me in July that the Cryptopia collapse had put a chill on the local crypto trading market and led Easy Crypto to take a more cautious approach to its software development, for fear of introducing security vulnerabilities into the platform.
While she said the simpler nature of the platform lowered the risk for customers, the ability to hold coins would be important as more casual crypto investors required different types of services from exchanges.
A June report from the Financial Services Council of New Zealand found as at April 2021 9.5 percent of Kiwis have invested, or are investing, in cryptocurrencies - up from 3.1 percent in March 2020.
Swyftx NZ opened up for trading today. But a reminder, and a warning form personal experience - crypto prices can be very volatile and it is a high-risk investment category, so go into it with your eyes open and diversify your investments to limit your exposure - Grainger recommends keeping only 5 - 10% of your net worth in cryptocurrencies.
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