The lines between crypto exchanges, neobanks, and zero-commission brokers are disappearing, creating multi-asset and multi-instrument platforms that pose growing competition to traditional CFD brokers.
In the following article, we trace the history of this evolution, focusing on how these relative newcomers have expanded and consolidated, attracting new generations of traders and taking advantage of network effects to become global leaders.
The crypto upstarts
It’s almost impossible to separate Bitcoin from the 2008 crisis. Bitcoin’s whitepaper was published in October 2008, and the network itself was launched on January 3, 2009. A Times of London headline from the same day is embedded into the Bitcoin network’s first ever transaction. It reads: “Chancellor on the Brink of a Second Bailout for Banks.” This genesis block speaks volumes about how Bitcoin’s pioneers regarded their project.
At the time, there weren’t even any exchanges on which to trade Bitcoin, or the growing list of alternative cryptocurrencies that were rapidly emerging. Kraken and Coinbase, for instance, weren’t founded until 2011 and 2012, respectively.
In the ensuing decade, crypto went from an asset that was seen as a threat to the financial system, to one that has been largely assimilated by it. Today, Bitcoin and Ethereum futures are traded on the CME and CBOE, while BlackRock, J.P. Morgan, BNY Mellon, Fidelity, Goldman Sachs, State Street, and Deutsche Bank are all involved in efforts to tokenize real world assets.
Meanwhile, former crypto upstarts like Coinbase and Kraken have become major financial players. Coinbase went public in 2021, while Kraken is in the process of doing so, and both firms have extended their reach far beyond the world of crypto assets.
Today both Kraken and Coinbase are licensed broker dealers that also hold FCM licenses. In addition to crypto assets, they offer zero-commission stocks and ETFs, futures, and their own debit cards. In short, they’ve expanded their businesses into both zero-commission brokerage and neobank territory. Furthermore, both Kraken and Coinbase now offer tokenized stocks to EU customers that are backed 1:1 by shares held by regulated custodians.
The zero-commission revolution
Zero-commission brokerage commenced with the establishment of Robinhood in 2013. By 2017, established household names like Fidelity and Charles Schwab were being pressured to cut their own commission fees. Schwab had already cut its fees to $6.95 first (from $8.95). Then in February of 2017, Fidelity cut its fees to $4.95 (from $7.95). Schwab responded several hours later by cutting its own fees to $4.95.
However, it wouldn’t be until 2019 that Fidelity, Schwab, E*TRADE, and TD Ameritrade all removed commission fees completely. Under continued pressure from Robinhood, which had amassed an enormous client base of young, mobile-first users, as well as its controversial payment for order flow (PFOF) business model that made the zero commissions possible, these established brokers had to follow suit to remain competitive. Schwab specifically cited Robinhood’s disruption as one of the reasons for the move.
In 2018, Robinhood expanded its offering to include cryptocurrencies and options. In 2019, cash management services were added via FDIC-insured partners, including debit cards and spending accounts. In 2025, futures trading was added, over 200 tokenized US stocks and ETFs were launched in Europe, and savings accounts that offer over 4% APY are currently being rolled out on an invite-only basis to Gold subscribers.
The neobank disruptors
The turmoil caused by the 2008 crisis led to widespread anger and lack of confidence in traditional banking institutions that arguably continues to this day. Subsequent regulatory changes aimed at reining banks in and preventing the sorts of excesses that led to the crisis opened the door for a new type of bank. Online only, mobile first, and geared to a younger generation of users.
In the U.S, post-2008 regulations such as Dodd-Frank did not directly empower neobanks like PSD2 did in Europe, however, the heavy compliance costs they imposed on incumbents created regulatory asymmetry, allowing fintech firms to bypass many of the restrictions that established banks were subject to.
An example of this was the Durbin Amendment to Dodd-Frank, which capped debit interchange fees for banks holding over $10 billion in assets. This allowed neobanks to partner with smaller banks that were exempt from these caps, effectively borrowing their FDIC insurance while also generating significant revenues from debit card transactions.
In Europe, the Payment Services Directive 2 (PSD2) forced banks to open their APIs to third-party providers. The change was groundbreaking, allowing fintech firms to access customer data and build their own financial services on top of pre-existing banking infrastructure. This is how app-based banks were able to onboard so many users quickly and easily, offering free peer-to-peer payments, and highly competitive foreign exchange rates.
In recent years neobanks have also expanded to encompass the world of financial services, even those that were formerly the exclusive domain of crypto exchanges and zero-commission brokers. A notable example is the UK-based Revolut. It launched crypto trading in 2017, stock trading and fractional shares in 2020, commodity trading, crypto staking and NFTs in 2022, and robo-advisory wealth management services in 2023.
CFD brokerage and the Futures pivot
Over the time period that the above developments have taken place, CFD brokerage has come under increased scrutiny from regulators, with leverage caps and marketing restrictions now more or less standardized between the UK, EU and Australia.
A 2024 Acuiti survey of 72 European CFD brokers showed that 54% of respondents were “quite concerned” about the impact of retail CFD restrictions, while 38% were “very concerned.” 69% of the respondents believed that EU countries would eventually move to impose heavier restrictions on the trading of CFDs, while more than half stated that they’d look to expand into exchange-traded markets if this were the case.
If the recent moves of some of the larger OTC players are anything to go by, then this pivot is definitely underway. IG’s acquisition of US broker Tastytrade in 2021 gave it access to the firm’s licenses, client base, partnerships, and infrastructure for trading listed securities. Its acquisition of UK neobroker, Freetrade, in 2025 served much the same purpose.
We see a similar pattern with Plus500. Its 2021 acquisition of Futures Commission Merchant, Cunningham Commodities, allowed it to enter the US futures and options market. Its 2025 acquisition of India’s Mehta Equities Limited gives it access to India’s massive retail trading market as well as a regulatory license to offer futures, options, and equities.
Both firms (and many more besides) appear to be positioning themselves in a manner that reduces their dependency on OTC revenues.
What brokers can do
As we’ve seen, the bigger OTC players have the resources to expand into other areas, much like the examples presented above, and this expansion via strategic acquisitions is already underway.
Small-to-medium sized firms may have to undergo this transition in a different way. Some will be content to serve core OTC traders who value the very features that have systematically been regulated away in stricter jurisdictions, such as high leverage. Light offshore regulation may be sufficient for these brokers, for the time being, at least.
Other companies that are intent on broadening their instrument landscape to include exchange-traded securities and derivatives, while lessening reliance on OTC volumes, will have to make wise technological investments.
Time is of the essence, though. Not only are crypto exchanges, neobrokers, and neobanks essentially transforming into everything apps for all things finance. They have pursued a strategy that has ensured that what they offer is maximally appealing to younger generations. Young traders today are far more likely to experience their first trade via their neobank app, than via an OTC trading platform. A generation ago OTC was one of the only games in town.
It’s also important to note that it’s not just financial services that have evolved in the period we have covered throughout this article. Fintech provision, too, has come along in leaps and bounds. The technologies required for OTC brokers to unlock a far wider selection of assets and instruments, whether it be trading platforms, integrations with executing venues, instrument-specific risk management capabilities, or high quality market data, is today more available, more affordable, more reliable, and more flexible than ever before. The question is how will these brokers take advantage of what’s currently available to maintain their relevance.
