itBit Launches Bitcoin Exchange with
$5.5M in Funding
Nov 11, 2013 Posted Businesses, Economics, News, Trading Tagged Singapore,
Trading, US, Volume Comments2
Trading, US, Volume Comments2
Today itBit, a global bitcoin exchange, announced their official launch as well as the
completion of their second round of funding. The company raised a total of $5.5M,
with the most recent round closed over the last month for $3.25M. itBit is opening
trading today for non-US institutional and retail traders, as well as some
US institutional traders.
with the most recent round closed over the last month for $3.25M. itBit is opening
trading today for non-US institutional and retail traders, as well as some
US institutional traders.
The exchange is headed by Rich Teo, who previously worked as a Senior Analyst at
Cedar Hill Capital Partners and Citigroup as an M&A analyst before that. itBit has
offices in Singapore, Shanghai and New York, and is looking to serve the full
global market of bitcoin traders. The latest funding round was co-led by
Canaan Partners and RRE Ventures, with Liberty City Ventures, Ben Davenport
and Jay Jordan also participating.
Cedar Hill Capital Partners and Citigroup as an M&A analyst before that. itBit has
offices in Singapore, Shanghai and New York, and is looking to serve the full
global market of bitcoin traders. The latest funding round was co-led by
Canaan Partners and RRE Ventures, with Liberty City Ventures, Ben Davenport
and Jay Jordan also participating.
Liquidity Provision
Trading will be available is USD, SGD and EUR, with fees based on a maker-taker model,
wherein traders adding orders to the book receive a 0.10% rebate and traders taking
liquidity off the book via market orders pay 0.70% or lower, based on volume.
By economically incentivizing limit orders, the maker-taker model encourages
traders to leave orders on the book, promoting deeper liquidity in hopes of avoiding
the low shallow books that so many existing exchanges have encountered when starting out.
wherein traders adding orders to the book receive a 0.10% rebate and traders taking
liquidity off the book via market orders pay 0.70% or lower, based on volume.
By economically incentivizing limit orders, the maker-taker model encourages
traders to leave orders on the book, promoting deeper liquidity in hopes of avoiding
the low shallow books that so many existing exchanges have encountered when starting out.
itBit is pursuing additional liquidity measures outside of the pricing model, including
a relationship with a quantitative trading firm for professional market making.
Per agreements between itBit and that firm, the firm will not receive rebates for
adding book depth, but instead a share of fees generated from trading volume.
According to Teo, the fee-sharing arrangement is to encourage tighter bid-ask by
driving the market maker’s incentive towards volume, rather than spread to market.
a relationship with a quantitative trading firm for professional market making.
Per agreements between itBit and that firm, the firm will not receive rebates for
adding book depth, but instead a share of fees generated from trading volume.
According to Teo, the fee-sharing arrangement is to encourage tighter bid-ask by
driving the market maker’s incentive towards volume, rather than spread to market.
Compliance
itBit has invested significant resources into appropriately addressing the regulatory
environment with a Singapore-based Head of Compliance, as well as enlisting
Thomson Reuters for registrant screening and Jumio for identity verification services.
The company does not yet have US money transmission licenses, but is currently
pursuing state-by-state licensing and partnering with an established international
money transmission company in the interim, with service to US retail customers
potentially available before the end of year.
environment with a Singapore-based Head of Compliance, as well as enlisting
Thomson Reuters for registrant screening and Jumio for identity verification services.
The company does not yet have US money transmission licenses, but is currently
pursuing state-by-state licensing and partnering with an established international
money transmission company in the interim, with service to US retail customers
potentially available before the end of year.
Technology
The itBit team wants to see bitcoin traded like any other foreign currency, which
also means advanced technical infrastructure, according to Teo. The exchange’s engine
was built based on NASDAQ open-source technology and is capable of handling millions
of trades per second, which gives itBit order of magnitude margin for market growth
before having to update their systems. The company is also employing globally-redundant
cloud hosting and Akamai DDoS protection to ensure reliability and uptime, as well as
FIX APIs to meet broader ForEx technical standards.
also means advanced technical infrastructure, according to Teo. The exchange’s engine
was built based on NASDAQ open-source technology and is capable of handling millions
of trades per second, which gives itBit order of magnitude margin for market growth
before having to update their systems. The company is also employing globally-redundant
cloud hosting and Akamai DDoS protection to ensure reliability and uptime, as well as
FIX APIs to meet broader ForEx technical standards.
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