British bitcoin exchange Netagio is exiting the gold market next month due to weak demand.
The exchange will remove its two order books for gold trading by the end of the year, according to Netagio CEO Simon Hamblin.
will instead enter the dollar and euro markets, with new order books for trading bitcoin for those currencies to be launched in mid-December. The company declined to specify a date.
Hamblin said the firm is repositioning itself to tackle the larger euro and dollar markets, while leaving its longstanding links to the gold industry behind.
"We're receiving this demand from customers and we really want to reposition the business ... [So] we're going to be removing the gold from our offering," he said.
Pound market dwarfed by euro, dollar
Netagio was spun out of GoldMoney Group, a gold storage services provider, that was established in 1991. Hamblin declined to provide details on user growth at Netagio.
Euro trading volumes were about 2.4 times greater than volumes in pound sterling in the last six months, according to data from Bitcoinity. The US dollar market is even larger, with trading volumes of about 13.5 times more than the euro market for the same time frame.
The largest market by trading volume is the yuan-bitcoin currency pair, which accounted for a 75% share of volume, according to Bitcoinity, although this figure is likely inflated because the major exchanges dealing in that market don't charge a fee for trades.
Hamblin is hopeful that Netagio's move into larger markets will translate into a boost in business.
"The GBP market is fairly small compared to other markets ... [The euro and US dollar] markets are substantially bigger than the UK market. Therefore we expect demand to be there," he said.
Hamblin said he believed that British exchanges have lagged behind over-the-counter trading (OTC) in the pound-BTC market. These trades are enabled by marketplaces like Localbitcoins or Bittylicious, which help buyers and sellers locate each other to trade pounds for bitcoins and vice versa. Exchanges are left with anaemic trading volumes as a result.
"The majority of trades are happening in the GBP market are happening as OTC trades," Hamblin said.
British banks block bitcoin businesses
The market for bitcoin-pounds trading has been hampered by British banks' refusal to work with bitcoin businesses. In September, the payments firm Capital Treasury Services cut ties with bitcoin companies on the Isle of Man after it was pressured to do so by the banks it worked with.
In contrast to bank's hardline stance against bitcoin, government officials and politicians in the United Kingdom have adopted an open stance toward digital currencies. The Chancellor has ordered a Treasury study on digital currencies, while a shadow cabinet minister has lauded bitcoin's potential to reduce consumer reliance on big banks.
Hamblin said that the opposing regulatory signals and banks' ambivalence towards bitcoin could indicate that the financial institutions were lagging regulators in adapting to digital currencies. More concrete reassurance from the state would be required before banks relaxed their stance towards bitcoin firms, he said.
"It would appear to me that the banks are waiting for some kind of regulatory view before they start opening up their relationships [with bitcoin companies], [although] the noises from the various regulatory bodies are probably one of the most positive in the world," Hamblin said.
Featured image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.