DigitalX to re-join cryptocurrency market place as liquidity provider

DigitalX (ASX: DCC) emerged from a trading halt this morning with plans to reignite its cryptocurrency market maker division by offering digital currency liquidity to the market place.

According to DigitalX chief executive officer Leigh Travers, the company has been providing liquidity to the Bitcoin market place since 2014.

DigitalX said it has more than A$18 million in liquid assets and its board has approved investing up to A$1 million in restarting its market making services.

As a result, DigitalX has started reviewing potential cryptocurrency exchanges, focussing on the Australian market.

The company plans to use arbitrage trading to take advantage of mispricing across exchanges.

As part of its activities, DigitalX will provide liquidity to both sides of the cryptocurrency market while retaining a small open position in the asset under trade.

The company said it will keep bid and ask limit orders below and above the spot price, which are frequently cancelled and updated in relation to the fluctuating spot price.

Under current Australian financial regulations, DigitalX is not required to possess an Australian Financial Services Licence to buy and sell on digital currency exchanges.

The same team that was involved in earlier liquidity trading operations will also oversee the resumed market making activities including Mr Travers, president Neel Krishnan, and chief technology officer Mike Segal.

“We wound down our trading desk last year due to a lack of funding; however, our strong financial position, together with the appreciation in the value of Bitcoin, has allowed us to reignite this service,” Mr Travers said.

While this division has been subdued, DigitalX has been expanding its initial coin offering (ICO) advisory services.

Early last week, the company announced it had been appointed by two cryptocurrency start-ups INS Ecosystem and CoinPoker to facilitate their respective ICOs.

As part of its advisory fee, DigitalX received tokens in the start-ups. DigitalX has also received about A$2 million worth of tokens for advising other ICO start-ups including Ether, Power Ledger and Etherparty.

Just before afternoon trade, DigitalX’s stock was up more than 22% at A$0.28.