NEW YORK (Reuters) - TradeZero, a Bahamas-based online broker-dealer, said on Thursday it had launched the world's first "dark pool" exchange for bitcoin to enable institutional investors to execute large trades.

The company will eventually open the exchange to other digital currencies such as ether and litecoin.

TradeZero has partnered with Jered Kenna, one of the earliest bitcoin investors and founder of the now defunct bitcoin exchange called Tradehill, for the venture.

Dark pools refer to trading outside the exchange done by large institutional investors. Off-exchange trading can make up about 40 percent of all U.S. stock trades.

"We are looking to provide the non-U.S. investor with the same access, tools and discounted commission structure that many U.S. traders enjoy today," said Daniel Pipitone, director of TradeZero said in a statement.

The company said customers will get access commission-free dark pool digital currency trading, allowing them to make large purchases or sales without substantially moving the market price.

TradeZero already allows commission-free stock and ETF trading, as well as equity and index options.

"If you want to see larger players moving in to do larger trades in bitcoin without upsetting the market, a dark pool is necessary," bitcoin entrepreneur Kenna told Reuters in an interview.

"I think it will bring a lot of stability in the market as well."

He said there is currently a required minimum opening balance of $10,000 to be able to trade on the dark pool exchange.

Kenna said when he launched TradeHill in the early days of bitcoin, the exchange offered a dark pool, but the company was never able to fund a bank to act as custodian for the fiat currencies, dollars and euro, arising from the bitcoin trades.

TradeZero will use a pre-existing bank for the fiat currencies, but Kenna declined to disclose the name of the bank.

Kenna was one of the earliest and larger holders of bitcoin. His initial purchase of 5,000 coins was for 20 cents each.

On Thursday, bitcoin traded at $589.81.