The digital asset exchange Gemini, operated by the Winklevoss twins, will begin offering customers the ability to place large orders outside of the exchange’s public order book. This new service positions Gemini to compete with firms that specialize in high-volume cryptocurrency trading for institutional clients.
Traditional central limit order books work well for smaller trades, but very large orders can overwhelm available liquidity and disrupt market prices.
Block trades address this issue by allowing large transactions to be executed directly between a buyer and a market maker, outside the open order book.
Starting at 9:30 AM EST on Thursday, April 12, any Gemini customer will be able to submit a block trade. The customer specifies whether they want to buy or sell, the total quantity, a minimum quantity required to execute, and a limit price. If a participating market maker agrees to the terms, the trade is executed off-book.
Adding block trading gives Gemini the potential to rival companies that serve large institutional traders such as hedge funds and banks. For example, Circle Trade, which has backing from Goldman Sachs, processes over $2 billion in digital asset trades each month.
Block cryptocurrency trading is relatively new in this industry, although the equities and futures markets have long used similar mechanisms to prevent large orders from disproportionately moving prices. These transactions typically occur in the over-the-counter (OTC) market, a broad category for trading activity that takes place outside formal exchanges like the New York Stock Exchange or NASDAQ.
Recently, block trading desks and OTC platforms have emerged in markets such as Hong Kong and Australia to meet demand from institutions looking to buy or sell large quantities of digital assets without disturbing the public market.
If Gemini’s block trading feature proves successful, it could become standard across digital asset exchanges. Market participants are watching closely to see whether Gemini’s main competitor, Coinbase’s GDAX (now Coinbase Pro), will add a comparable service.
By enabling any customer to place block trades, Gemini is expanding access to tools that were traditionally limited to institutional investors. That said, availability does not mean unlimited access: Gemini will enforce minimum sizes for block orders—ten bitcoin or one hundred ether—to ensure trades meet a threshold of scale.
In a blog post, Cameron Winklevoss explained Gemini’s approach: “In accordance with our commitment to an equitable, transparent, and rules-based marketplace, block orders will be electronically broadcast to participating market makers simultaneously, ensuring best execution and price discovery for those participating in the program. Block orders do not interact with our continuous or auction order books. Trade information will be published via our market data feeds ten minutes following the execution of a block trade.”