Oanda readies cryptocurrency trading in Asia after buyout by CVC Capital

PUBLISHED : Saturday, 05 May, 2018, 11:33am
UPDATED : Saturday, 05 May, 2018, 11:33am

Oanda, the online foreign exchange broker which this week accepted a buyout offer from CVC Capital Partners, will consider offering cryptocurrency trading this year through a derivative product in Singapore.

The new product would involve what’s known as a contracts for difference (CFD), a synthetic financial product that allows investors to take leveraged bets on the rise and fall of the underlying asset without the need to take physical delivery.

Oanda, known for its exchange rate data and foreign exchange conversion tool, has been quoting bitcoin prices since 2013. The firm has recently been exploring whether to offer trading of bitcoin and other leading cryptocurrencies through CFDs, amid growing demand, much of it driven by Japanese and South Korean retail investors.

The price of bitcoin hit a record high of US$17,527 in January, and fell to a recent low of US$6,636 in April.

Oanda has no plan to offer cryptocurrency trading in China, where the products are banned.

Still, Oanda says it has been conducting internal tests since the beginning of this year as part of preparations for cryptocurrency trading.

Plans to branch into cryptocurrency trading came after several months of discussion with CVC Capital Partners, ahead of this week’s buyout announcement.

The move also comes as Oanda faces competition from online foreign exchange brokers such as IG Group and eToro, which have also launched their respective bitcoin CFD businesses.

Onada chief executive and president Vatsa Narasimha said the company will step up new product launches and may also expand in China pending further studies into such opportunities.

Private equity firm CVC Capital Partners, working through its Asia Fund IV has bought all existing equity from the original shareholders, which include venture capital firms New Enterprise Associates and Index Ventures.

Narasimha refused to disclose the deal value, adding only that it is still subject to various regulatory approval.

“The management spent a lot of time talking about our vision and strategies with CVC Capital

Partners, and CVC agreed with our views on growing [the business] in the broader Asian market,”

said Narasimha.

Narasimha expects CVC Capital Partners will also lead the company to grow through acquisitions,

adding that the retail FX trading market is fragmented and hence there are opportunities for consolidation.

In Asia, Oanda currently has offices in Tokyo, Sydney, Singapore, and New Delhi. Apart from cryptocurrencies, it also offers CFDS trading in bonds, precious metals, commodities and equity indices.