Will the regulation of cryptos impact the premium?
As of 1 June 2023, cryptos are regulated by the FSCA. Anyone doing arbitrage must be an authorized FSP with a “Cat II” FSCA license to trade on a discretionary basis and execute FX and arbitrage simultaneously.
Regulation will reduce the number of arbitrage providers, which benefits the premium. However, the impact of new institutional participants is unclear—they could drive large volumes, affecting derivatives trading and potentially compromising the arbitrage.
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Which cryptos or financial instruments are traded?
We have the flexibility to utilise stablecoins and cryptocurrencies based on the premium they offer when we make trading decisions. In the past, we have typically preferred stablecoins due to their higher liquidity and lower risk. However, there are ...
Why does the OTC premium appear to be lower than the on-exchange premium?
The premium advertised by many other arbitrage services is based on-exchange prices and is misleading. That figure is calculated by taking the best possible prices on exchange at any given time and is often unattainable without taking on additional ...
Why do we discourage setting minimum trading premia?
The founders of Currency Hub have always traded their allowance in Q1 since 2017. Why? Because premiums decline over time, and timing spikes is impossible—just like in equities, where Warren Buffett advises staying in the market rather than trying to ...
Why is CURRENCY HUB’s “Active Trading Strategy” unique?
Having the FX intermediary license and the FSCA Cat II discretionary asset management license is unique to Currency Hub. This means that it allows us to simultaneously book and hedge the forex rate while negotiating the best premium rate with the ...
What are the risks associated with crypto arbitrage trading?
The counterparty risk we face primarily lies in trusting that we have chosen the best service providers across the entire ecosystem. We have mitigated this risk by having an FX intermediary within our organization and holding the FSCA Cat II ...