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Interactive Brokers Group launched its very own cryptocurrency trading service through Paxos. Thomas Peterffy, Chairman and Founder of Interactive Brokers Group, joins Yahoo Finance Live to discuss.
JULIE HYMAN: Interactive Brokers is going to begin to allow crypto trading in a partnership with a company called Paxos. Let's talk more about this offering and what is expected from it. Thomas Peterffy is with us, chairman and founder of the Interactive Brokers Group.
Thomas, it's always great to see you. I got to ask, what was the holdup? What took you guys-- you know, we've had a lot of other companies get into crypto trading before now. Was there a particular obstacle or something that kept you guys from introducing crypto trading before?
THOMAS PETERFFY: Well, for a while we were casting about as to how to do it. Because you know, it depends on what kind of licenses you have and how long it takes to get them and so it is not a very simple thing. But at the same time, many of our clients who manage well-diversified portfolios have been asking us to give them the ability to transact in cryptos. So the urgency just kept growing.
Similarly, our registered financial advisor clients have been asking for cryptos for their clients. So it seems that nowadays, you know, having a small percentage of your assets allocated to cryptos has become common wisdom. And this, in addition to many of our customers who want to trade the relationship between different tokens and the futures and other related assets. So you know, the interest is growing very quickly.
And at the same time, you know, we had to look for a way where we can offer very, very low fees, which is customary of Interactive Brokers. So we couldn't go with just anybody. So it took a long time to negotiate this deal. And so eventually we ended up with Paxos and so we were able to offer the customary very low prices that you're showing on the screen there. And so it's for a $1,000 trade, it's $1.80, and our nearest competitor is twice as much and then it goes up from there. So we are at this time the lowest-priced provider in the space. So that took some time to figure out how to do that.
BRIAN SOZZI: Thomas, how difficult is it to launch a cryptocurrency trading platform when there really isn't any regulatory guardrails out there right now?
THOMAS PETERFFY: So that is a very serious issue because you know, we can't do anything where we later on the SEC or CFTC or some other regulator, can come knocking on our doors and say that well, you were not supposed to do this or that or the other thing. And so it's very difficult.
JULIE HYMAN: Thomas, how big a business do you expect this to be for Interactive Brokers?
THOMAS PETERFFY: Well, I think that's very difficult to forecast. So we haven't done any work on that, we just understood that people really, really want us to do this. So why we have to do it. So I don't know, it could be maybe 20% of our business if we're lucky.
BRIAN SOZZI: Thomas, have you become a believer in crypto? Do you own any in your own portfolios?
THOMAS PETERFFY: I have for some time. So I do own some cryptos and I do own some gold. And I must say that the cryptos have done much, much better than the gold. So I mean, you know, you have to prepare for the small percentage possibility or probability that things can fall apart and at which time you know, especially with all these crazy, you know, issuance of more and more and more and more money, this deficit spending, is, I don't know, I mean, people sooner or later could-- I'm not saying they will-- but could lose faith in paper money.
JULIE HYMAN: And so--
THOMAS PETERFFY: That's happened before in other places.
JULIE HYMAN: Yeah. It seems like you know, we're not there yet. I guess that is an eventuality. But I mean, do you-- so are you adding to your cryptocurrency assets since you've been pleasantly surprised by the performance?
THOMAS PETERFFY: I haven't added lately but it's always a possibility. And now there is a simple way for me to do it. And so up until this time, up until last Monday when we started this, it would have been very complicated as it was the first time when I bought it.
JULIE HYMAN: Now, you can buy it on your own platform. Thanks so much, Thomas.
THOMAS PETERFFY: That's right.
JULIE HYMAN: It's great to see you. Thomas Peterffy is chairman and founder of Interactive Brokers Group. It is always really fun to talk to you. We appreciate it.