The Flow: Prime-brokerage in digital assets Feat LTP CEO Jack Yang Blog Resources

Thus, multi-prime has mainly been adopted by larger clients as it might be cost prohibitive for smaller money managers. Custody is the “foundation of the [prime services] pyramid.”xxi It is one of the key challenges that service providers had to solve to facilitate broader institutional involvement. While custody is important in a classic setting, safeguarding digital assets like bitcoin is https://www.xcritical.com/ paramount because, unlike traditional markets, there is no recourse if the assets are lost or stolen. Digital asset custody is also a highly technical undertaking and requires hardware, cybersecurity, and cryptographic expertise, that is not as relevant in the protection of traditional assets such as cash, stocks and bonds. Solving secure custody is necessary to effectively facilitating the following layers in the pyramid. Market participants engaged in credit substitution through the use of prime brokers, SEFs and SEF applicants, and DCOs (existing and applicants) engaging in clearing activities in digital assets or cryptocurrency markets should work with legal counsel to consider how to best ensure compliance in light of these Advisories.

Helping companies, investors, and industry trailblazers navigate the crypto and digital asset economy.

Another key development was the shift from a single prime model to a multi-prime model to reduce counterparty risk, contradicting one of the advantages of prime brokers to provide a one-stop shop. Clients realized that no prime broker was too big to fail cryptocurrency prime brokerage and spread their risk across several prime brokers, especially providers with strong capital reserves. However, the multi-prime model led to an increase in operational complexity and cost, requiring additional investment from money managers in incremental risk management processes and technology and resources to reconcile activity at different prime brokers.

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The Flow is Finery Markets’ branded podcast series, dedicated to exploring the exciting world of institutional crypto trading. Each episode explores the currents shaping the digital asset markets, offering listeners a unique blend of expert insights, industry trends, and forward-thinking strategies. Hosted by Finery Markets’ thought leaders and featuring a roster of distinguished guests from across the financial and technological landscapes, The Flow navigates through the complexities of electronic trading infrastructure, regulatory landscapes, and the evolving dynamics of liquidity and market making. It is unknown where digital asset prime brokerage will settle and how service providers will address challenges they face, as there is no full-service digital asset prime broker today. As the industry matures and participants expand, it will be important to track approaches to the following unanswered questions.

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The company was founded by executives from Goldman Sachs, Accenture, and top quantitative asset managers with a common vision to leverage domain expertise and emergent technologies to make electronic trading simpler, more transparent and more efficient for institutional investors and traders. OneChronos is a Y Combinator alum backed by top venture investors in fintech, digital marketplaces and A.I. OneChronos is a technology company at the intersection of capital markets, machine learning and mechanism design, providing innovative execution venues to those in the electronic trading world. [3] Note that in March 2019, CFTC staff (now called the Markets Participant Division) granted no-action relief to swap dealers who are prime brokers facilitating prime brokerage activities and liquidity for SEFs.

Bespoke solutions for a digitally native ecosystem.

While these forms of authorization are similar, a New York State limited purpose trust company charter may provide some additional benefits. For example, a limited purpose trust company can exercise fiduciary powers, while a BitLicensee cannot. In addition, a limited purpose trust company can engage in money transmission in New York without obtaining a separate New York money transmitter license. For more information about applying for a limited purpose trust charter, visit Commercial Banks & Trusts.

Market participants will need to carefully evaluate their own practices, and seek guidance of legal counsel in that effort, to ensure their activities do not require DCO registration. Hidden Road Partners is the global credit network for institutional investors, enabling seamless access to traditional and digital markets. Conflict-free and built on a modern technology stack, we remove complexity and cost in prime brokerage, clearing and financing. Located and regulated in Malta, BEQUANT’s breadth of products include prime brokerage, custody and fund administration, all enhanced by an institutional trading platform providing low-latency trading, liquidity and direct market access for investors. “OSL’s combination of experienced traders, deep global relationships and advanced technology allow its prime brokerage to match large institutional blocks across major digital assets.” said OSL CEO Wayne Trench. “The appetite for digital assets across the Americas is rapidly growing and the timing of our launch coincides nicely to meet this demand.”

OSL Americas will also act as the regional hub for engagement with OSL’s growing list of SaaS partners. Access to the OSL platform’s industry leading institutional-grade digital asset exchange will follow in due course. Led by Head of Americas Fernando Martinez, the Americas unit facilitates OSL’s market-leading prime brokerage offering, including electronic and OTC execution and coin borrowing and lending, into OSL’s deep pools of digital asset liquidity. OSL Americas will also act as the regional hub for engagement with OSL’s growing list of SaaS partners. Access to the OSL platform’s industry leading institutional-grade digital asset exchange will follow in due course.

We combine our core blockchain infrastructure services with the breadth of our Global Markets business, offering bespoke financial and syndication services. We offer our clients leading investment advice to ensure that they’re always in-touch, well-informed, and up-to-date with the markets they are exposed to. With digital asset custodians springing up almost daily in this new age of finance, it’s hard to know who to trust.

In this article, we discuss the issues addressed by DCR, and consider the ramifications for market participants who engage in the activities addressed in the Staff Advisory letters. Privacy Policy.Security products and services are offered by Galaxy Digital Partners LLC, a member of FINRA and SIPC. We offer our clients the highest level of industry security for your funds – fully insured at all times – even in transit.

• Rather, they are akin to boutique prime brokers that specialize in one or two specific prime services.
• While the importance of individual services provided may vary between traditional markets and digital asset markets, the purpose of a digital assets prime broker is the same – providing a streamlined, compliant, end-to-end investing and trading experience.
• With a team of more than 100 analysts, Statista R provides comprehensive market research and data analysis, proprietary surveys, and access to thousands of consumers.
• In our Institutional Digital Asset Survey, we found that institutional investors’ interest in digital assets is on the rise.
• Any entity licensed or chartered by the New York State Department of Financial Services (the “Department” or “DFS”) to conduct virtual currency business activity in New York (collectively, “VC Entities”) may list coins on the Greenlist without having a separate DFS-approved coin-listing policy.
• Hosted by Finery Markets’ thought leaders and featuring a roster of distinguished guests from across the financial and technological landscapes, The Flow navigates through the complexities of electronic trading infrastructure, regulatory landscapes, and the evolving dynamics of liquidity and market making.

Since the beginning of the quarter, the company has supported regional regulated investment managers to launch single and multi-asset exchange traded products, including leading digital asset ETFs, by providing market leading operations, through competitive pricing, efficient settlements and its robust integrated platform. A digital asset prime broker can address these limitations by enabling netted collateral and providing consolidated settlement – the ability to fund a single account and connect to multiple high-quality liquidity providers and exchanges. This also reduces the burden of each client having to individually conduct due diligence on multiple trading venues. We give institutional investors the tools to execute investment strategies simply and safely. We’ll handle the integration, risk management, execution and reporting, so you get the most productive trading experience possible. To conduct virtual currency business activity in New York State, entities can either apply for a BitLicense or for a charter under the New York Banking Law (for example, as a New York State limited purpose trust company or New York State bank) with approval to conduct virtual currency business.

As market participants become more heterogeneous and sophisticated with the strategies they deploy, digital asset service providers will evolve in line to offer a comprehensive client experience. The stack of relevant prime services may differ between traditional and digital asset markets. While digital asset prime may not settle on the identical solutions provided by traditional prime, it will be rooted in an identical purpose – a master relationship that facilitates access to all relevant markets and service providers. As institutional interest in the digital asset market grows, so is the demand for more robust financial services.

Hidden Road’s credit network facilitates OTC trading between market participants, with trades executed bilaterally between counterparties and intermediated by Hidden Road as the credit counterparty. Hidden Road’s OTC prime brokerage will further institutional adoption of digital assets by giving counterparties full ownership and control over their execution technology, liquidity and custodian choice for both fiat and digital assets. BEQUANT Pro is a prime brokerage platform for institutional clients for a new digital asset class. Its 100+ institutional clients are offered direct market access to multiple trading venues, simplified KYC and compliance verification and an ability to create multi crypto and fiat accounts.

To date, traditional institutional investors that have entered the space have mainly been interested in building long exposure to relatively more established assets such as bitcoin and their demands have been satisfied by custody and liquidity aggregation solutions for the most part. Additionally, as large traditional hedge funds looking to deploy more complex trading strategies enter digital asset markets, they will demand incremental financing solutions and financial products. In conjunction with Hidden Road’s support for exchange-traded products, the new OTC prime brokerage service enables true spread optimization for the buy side and brokerage communities, and a quicker, wider distribution channel for institutional market makers. Employing a novel approach that nets positions across all liquidity providers and venues, the offering introduces new operational and capital efficiencies while reducing credit risk, settlement risk and operational risk. Additionally, by increasing access to liquidity and expanding distribution, Hidden Road’s digital asset prime brokerage eliminates the need to onboard and negotiate multiple bilateral relationships. Financing solutions that allow clients to borrow funds or borrow assets also reduce the costs of deploying more sophisticated and opportunistic trading strategies.

The applicant’s NMLS Identification Number must be included on every hard-copy document submitted to the Department. Please also note that, in the process of considering an application, DFS may request additional information and supporting documents, beyond those found in the BitLicense Application Checklist. To submit an application, please follow the instructions on the NY Virtual Currency Business Activity License New Application Checklist (the “BitLicense Application Checklist”).

The Department of Financial Services uses the Nationwide Multistate Licensing System and Registry (NMLS) to manage the BitLicense. NMLS is a secure web-based system created by the Conference of State Bank Supervisors (CSBS), in cooperation with the American Association of Residential Mortgage Regulators to provide efficiencies in the processing of state licenses and improve supervision of state-regulated industries. Through NMLS, companies maintain a single record to apply for, amend, surrender and change license authorities in one or more states, and make reports conveniently and safely online. Both Advisories are remarkable for their brevity, considering the breadth of activity they encompass.

ST. JULIANS, Malta, Feb. 22, 2022 /PRNewswire/ — BEQUANT, the digital asset prime brokerage and exchange, is pleased to announce that Kraken has been integrated on its prime brokerage platform, BEQUANT Pro, and added to the growing list of exchanges that BEQUANT offers to its clients. The company offers OTC, iRFQ and electronic trading services giving traders access to the world’s deepest liquidity pools, as well as secure and insured wallets to ensure the safekeeping of digital assets with timely transaction settlement. The company offers OTC, iRFQ and electronic trading services giving traders access to the world’s deepest liquidity pools, as well as secure and insured wallets to ensure the safekeeping of digital assets with timely transaction settlement.

The Advisory also does not offer an opinion as to what digital assets constitute commodities or securities, or whether having CFTC-registered DCO clear digital asset derivatives gives the CFTC different or exclusive authority over those products. The news comes after OSL and Standard Chartered announced a partnership to launch a digital asset brokerage and exchange joint-venture with an initial focus on the European and UK markets. We’re driving the mechanisms of investment brokering and asset management that the world has grown accustomed to, into the future age of digital assets.

Furthermore, the absence of detail in this guidance requires market participants to engage in their own interpretation of the scope of the CFTC’s stated general areas of focus. With Prizma, you are exposed to trading the underlying asset rather than artificially manipulated derivatives. We give you access to proprietary credit lines that give you the best positions in the market – beyond just leverage. Our systems manage risk at a professional fund management level, that can be adjusted to your appetite.