Pause My Algorithmic Trading Bot During S&T Internship?
I have a market making algorithmic trading bot that operates on a decentralized crypto exchange (dex). It basically places bids and ask to build a spread on illiquid markets, and rebalances the orders as they get filled to get back to neutral while also bidding more and asking less than anyone else to maximize volume for returns.
I am earning yield through liquidity providing (the platform basically pays users to set limit orders), through the simple buy low sell high MM model, and I am also churning volume to get a larger airdrop allocation. The main takeaway is that this is in no way directional and runs on its own and earns me a decent yield.
It's obvious it's my money , someone needs to simply identify my Coinbase account, see the money transferred to my self custody wallet, and then transferred onto the dex account.
So can I realistically get this approved by the bank? The bank approves stock trades, would they approve of a short algorithm?
Based on the most helpful WSO content, here's what you need to know:
Banks typically have strict compliance policies regarding personal trading activities, especially during internships or employment. While they may allow stock trades under specific guidelines, algorithmic trading on decentralized crypto exchanges (DEXs) introduces additional complexities that could make approval challenging. Here are the key considerations:
Disclosure and Approval: You must disclose your trading bot to the bank's compliance team. They will evaluate whether it aligns with their policies. Since your bot operates in crypto markets, which are often viewed as high-risk and less regulated, this could raise red flags.
Conflict of Interest: Even though your bot is non-directional and operates independently, the bank may perceive potential conflicts of interest, especially if the bank has exposure to crypto markets or related activities.
Regulatory Concerns: Crypto trading, particularly on DEXs, is often under scrutiny due to concerns about money laundering, market manipulation, and regulatory compliance. Banks may be hesitant to approve activities in this space.
Proof of Ownership and Control: While you mentioned that the funds are clearly your own, the bank may still require detailed documentation to verify this and ensure there’s no external influence or risk.
Precedent with Stock Trades: While banks may approve stock trades under strict guidelines (e.g., pre-clearance, holding periods), crypto trading is a different ballgame. The decentralized and anonymous nature of DEXs could make compliance monitoring difficult.
Recommendation:
Ultimately, the decision will depend on the bank's specific policies and their stance on crypto-related activities.
Sources: 5 Key Reasons Why Bitcoin and Other Cryptocurrencies Went Under!, $BITO | The Daily Peel | 10/18/21, Cava Slaps | The Daily Peel | 7/11/2023, Turing down IB FT offer to run my startup?, Pack Your Bags | The Daily Peel | 4/22/22
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