San Francisco Frontiers - German bourse banks on Trump-fuelled crypto boom

Boerse Stuttgart group CEO Matthias Voelkel said "the election of Donald Trump and his ambition to project the US as a 'Bitcoin nation' is expanding the market" -- and that his group is seeking a bigger slice of the crypto pie.

The cryptocurrency sector has had a questionable reputation in some quarters owing to the extreme price volatility and their use by cybercriminals.

None of which has stopped the Boerse Stuttgart Group from using the past five years to build up what it says is the biggest crypto trading platform among Europe's stock exchanges.

While Voelkel won't reveal the exact value of cryptocurrencies traded at the Stuttgart Boerse, he told AFP that the amount tripled last year and represented around "25 percent of revenue".

Bitcoin, the most important cryptocurrency globally, accounted for "almost 50 percent of this activity," he added.

The Boerse did divulge at the end of last year that the amount of cryptocurrency held at the exchange for clients had reached 4.3 billion euros.

The original idea behind cryptocurrency was to bypass traditional financial institutions and facilitate direct transactions between individuals using decentralised blockchain technology.

They are traded on large international platforms, such as Binance and San Francisco-based Coinbase. An earlier market, FTX, imploded in spectacular fashion and filed for bankruptcy in 2022.

Some warier entrants to the emerging crypto market prefer to turn to banks or stock exchanges to act as middlemen. These are exactly the clients Boerse Stuttgart is after.

- Trump support -

The exchange says it has managed to win more than a million clients in crypto trading, both professionals and private individuals, mostly in the German-speaking world.

Voelkel told AFP he had also invested in Bitcoin, saying he was won over by the tamper-proof technology that underlies it.

Gilbert Fridgen, professor in digital financial services at the University of Luxembourg, said it is true that cryptocurrencies "do not have any inherent value".

And yet "people are prepared to pay for them" because "they are confident that a Bitcoin which is worth something today will also be worth something tomorrow", he told AFP.

Indeed in early December Bitcoin capped a blistering rally since Trump's election by surging past $100,000.

"CONGRATULATIONS BITCOINERS!!! $100,000!!! YOU'RE WELCOME!!!" the president-elect wrote in a characteristic social media post. "Together, we will Make America Great Again!"

Voelkel thinks cryptocurrencies will only continue to gain in popularity, pointing for example to Bitcoin's "limited supply and growing demand from investors of all ages".

Once sceptical of cryptocurrencies, traditional banks are also starting to warm to them.

Professional and private investors are too. The European Central Bank estimates that 10 percent of them own digital assets.

- 'Positive dynamic' -

Stuttgart Boerse is not alone in Germany in entering the cryptocurrency market. Last March the country's biggest stock exchange, Deutsche Boerse, also launched a trading platform dedicated to the sector.

For the moment the pan-European Euronext group is not planning a platform to trade cryptocurrencies directly but does allow investments in financial products linked to digital assets already listed on its markets.

As more players of the traditional financial world venture into cryptocurrencies, Voelkel hopes that the Stuttgart Boerse can be a "partner for banks and European financial institutions offering crypto services to their clients".

In order to facilitate more crypto-related trade, the Stuttgart Boerse has been developing partnerships with liquidity providers and banks.

Voelkel rejects the idea that the crypto deregulation promised by Trump will lead to more of the market relocating to America.

"The market in Europe is benefiting from a positive dynamic," he told AFP.

The cryptocurrency trade in the EU is governed by the MiCA regulation, adopted in 2023 as the world's first comprehensive rules governing the sector in order to protect investors against abuse and manipulation.

"We're right to continue to allow the cryptocurrency trade in a well regulated environment," Fridgen said.

He said that following this model will mean "clients will continue to want to invest in Europe, and for this European platforms are necessary."

Q.Nelson--SFF