Crypto Trading – Current state in Germany

What is Crypto Trading? 

The trading of cryptocurrencies started in 2008 with the implementation of the first cryptocurrencies based on the distributed ledger technology (DLT). Since then, more and more exchanges have been established. Most of these exchanges are not regulated and some of them have been hacked in the past. An easier access to cryptocurrencies is to invest into crypto funds. The first crypto fund in Germany was established by the bank Hauck & Aufhäuser in the beginning of 2021. 

Current state in Germany 

Only few banks enable the trading of cryptocurrencies for institutional investors in Germany. Bankhaus Scheich from Frankfurt and Bankhaus von der Heydt from Munich offer institutional crypto trading by acting as a broker for their clients. These banks use the software from Blocksize Capital to trade crypto assets. A lot of Crypto exchanges from outside of Germany and the EU offer Crypto trading for clients. These exchanges are often not regulated, so clients need to be careful. These unregulated exchanges can also be hacked, which has happened several times in the past. Börse Stuttgart Digital Exchange is the first fully regulated German Crypto Exchange, that was established in 2020. 

Blocksize Capital 

Blocksize Capital is a technology service provider specializing in Digital Assets. Established in 2018, Blocksize Capital is providing a professional trading infrastructure for institutional clients. The infrastructure of Blocksize Capital gives its clients access to market data and professional crypto trading. Operating as a single end-to-end system, their solutions enable low latency access to multiple crypto exchanges. In contrast to traditional exchanges, crypto exchanges are relatively fragmented and often do not enough liquidity for larger orders. This problem is solved by Blocksize Capital by providing liquidity from over 30 exchanges. A smart order router will then split the large order to multiple exchanges for a best price execution. 

Algorithmic trading 

Many companies start to make profits through trading on the free market. This involves forecasting certain cryptocurrency developments minutes or seconds in advance. With quantitative and algorithmic trading this works automatically. Algorithms and trading strategies will be so called back-tested on historic market data. This way companies can see how much profit they would have made in the past and have a projection on how much profit they can make with this algorithm in the future. 

Sources: 

https://www.tagesschau.de/wirtschaft/finanzen/bitcoin-handel-kryptowaehrungen-trading-101.html

https://www.bsdex.de/de/lp/crypto/?from_lp=crypto_1&show_landing_notice=lp_crypto_1

Written by: Ferdinand Klinke, Blocksize Capital GmbH