Thursday 15 April 2021 11:54 am

Institutional clients are here but is the crypto market ready to welcome them?

Developing the right products to serve institutional clients is the key for the crypto industry to reach mainstream adoption.

By Konstantin Anissimov, Executive Director at CEX.IO.

Institutional clients are investing heavily in cryptocurrency.

According to Bitcoin Treasuries, institutionals hold 6.76 per cent of the total BTC supply, which includes investments from hedge funds, family offices, private firms, as well as major publicly traded companies, such as Tesla and MicroStrategy.

Among corporate clients, the newest joiners include the Chinese technology company Meitu and the Norwegian industrial investment company Aker that purchased a total of over $108 million worth of BTC in March.

However, enterprises are not just here to stock up from Bitcoin. Many businesses are also developing digital asset solutions and accepting crypto – a crucial indicator signaling that cryptocurrencies are now becoming a full-fledged asset class.

From Tesla to real estate billionaire Rick Caruso’s Caruso Properties, companies are adopting digital assets for payments as well.

At the same time, while Visa and MasterCard are working on implementing crypto transactions, PayPal recently announced that it would allow customers to check out with digital assets at all of its 29 million merchants by late 2021.

While there were mainly enthusiasts in this field a few years ago, it has become clear by now that crypto adoption is gaining traction among businesses, governments, and high net worth individuals.

But how is the crypto market responding to this massive surge in interest? And, most importantly, is it ready to accept the institutional clientele?

The crypto industry is changing, but few can handle the surging institutional demand

The cryptocurrency market recognised the demand from institutions, with both crypto and non-crypto providers rolling out their digital asset solutions to fulfil their needs.

That said, there aren’t many service providers on the market who can actually handle this massive influx of corporate clients.

We have witnessed this shortage, especially among providers offering aggregated liquidity for the digital assets, which are crucial for institutionals to gain exposure to the crypto market at the best available price and as quickly as possible.

For that reason, it has become crystal clear for CEX.IO that enterprise clients need an institutional-grade cryptocurrency platform.

And this is the reason why we launched the CEX.IO Prime ecosystem, a new suite of products that exclusively provides various digital asset services to institutional investors.

With CEX.IO Prime, we plan to create a full-fledged ecosystem that can compete with investment banks to serve institutional clients and provide them easy exposure to crypto.

Aggregating liquidity from the best providers

The enterprise-read liquidity aggregation solution CEX.IO Prime Liquidity is the first service in CEX.IO’s institutional-grade products suite.

In addition to serving the immense institutional demand with the liquidity aggregator service, we are considering expanding the prime ecosystem with new corporate solutions, such as an OTC desk, a corporate lending platform, custody and many other services.

With Prime Liquidity, institutional investors can take advantage of the following key features:

Hand-picked best liquidity providers in one place: Trading on a single exchange comes with increased risks for traders as such services update frequently, which means that their systems can be offline for several hours a week. Prime Liquidity solves this issue by providing corporate clients real-time access to digital asset liquidity and market data from hand-picked and best-in-class providers under one platform. As a result, institutional investors have 24/7 access to cryptocurrency markets at the best available price.

Favourable liquidity provider terms: We have excellent relationships with many liquidity providers. As a result, Prime clients can execute numerous transactions without rate limits. At the same time, we always remain neutral; the algorithm is the one that decides which orders to pick up. For that reason, CEX.IO’s institutional clients have access to impartial and consistent best price order execution on the Prime Liquidity platform.

Nearly 200 digital asset pairs supported: Our team is turning a great focus on adding new offerings from our liquidity provider partners. As a result, Prime Liquidity currently supports 195 cryptocurrency pairs, including BTC, ETH, stablecoins, and DeFi tokens.

Centralised settlement: Most technical liquidity aggregator solutions on the market simply collect all the APIs from different platforms in one place, requiring users to create accounts and deposit funds at each service prior to trading crypto. At Prime Liquidity, we don’t want our clients to worry about manually transferring capital from one platform to another. For that reason, we take care of such processes ourselves, so our clients only have to use a single point of custody on CEX.IO to trade across all the connected liquidity providers.

Professional trading features: Flexibility was a key priority for us when designing Prime Liquidity. While our clients can conveniently manage their funds via a single account, they can optionally create sub-accounts for different strategies and separate capital and profit. With professional trading features, Prime clients can track all their trading data while having access to advanced reporting tools.

Crypto service providers have to step up their game to serve institutions

The current growing demand among institutional investors is only the tip of the iceberg.

As cryptocurrencies become increasingly mainstream, the asset class will attract new participants and further major players from non-crypto industries.

However, the digital asset industry must accept them and serve their needs to provide a positive experience and build further trust between the two fields as well as to facilitate the organic growth of the cryptocurrency market.

At CEX.IO, we have created the institutional-grade CEX.IO Prime ecosystem with a strategy to take a leading place in this developing sector while crypto is on the road to mainstream adoption.