FTX Launches US Equities Trading with Stablecoins as a Funding Option

Sam Bankman-Fried, the meme-loving billionaire founder of crypto exchange FTX, is back in the news. 

A week after Bankman-Fried purchased a 7.6% stake in Robinhood, FTX has launched its stock trading platform, FTX Stocks, in beta.  

FTX Stocks offers trading and investing in a range of US securities including common stocks and ETFs.  The platform offers no-fee brokerage accounts, commission-less trading, free market data, and no minimum required balances or tiered systems.

The move comes days after Robinhood announced its own foray into web3 with a DeFi wallet.

FTX now operates the first stock trading platform that allows users to fund their accounts with fiat-backed stablecoins like USDC – customers can, of course, still use bank transfers and other traditional funding methods. 

Algorithmic stablecoins have struggled since Terra’s collapse, but fiat-backed stablecoins like USDC and Tether have been primarily steady around their $1 peg. USDC sits at a market cap of $52.8B and Tether (USDT) is at a $74.1B market cap.

FTX Stocks will initially route all orders directly through Nasdaq rather than routing trades through third-party market makers. FTX President Brett Harrison tweeted that FTX will “continue to allow our customers full transparency and choice in order routing.”

The exchange is choosing not to receive payment for order flow (PFOF), a form of compensation that a brokerage firm receives for directing orders to different parties for trade execution. PFOF has been controversially used by Robinhood as it often means that customers are not receiving the best prices and are being front-run by high-frequency trading firms.  Bankman-Fried said in a tweet that FTX will make “nothing” from FTX Stocks and that their goal is “just to give customers a great experience.”  

“I think it’s an effort to onboard more regular people into crypto and just be the all-around best exchange and really make crypto [and] tradfi feel like one,” Gauthier Le Meur, founder of crypto index fund manager Alongside, told The Defiant.

DeFi has already been blending with TradFi via synthetic stocks of companies like Tesla, Apple, and Amazon created by projects like Synthetix.  Synthetic assets mirror the price of real-world assets and give traders around the globe access to price exposure without the burden of owning or transacting real assets.