The Role of Prime Brokerage in Digital Assets

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, https://www.xcritical.com/ it’s hard to know who to trust.

Alessandro Balata,Portfolio Manager,Fasanara Capital

It would be a stretch to say a full-service prime broker with all the products and attributes of bulge bracket prime services teams in traditional markets exists in digital asset markets today. Rather, they are akin to boutique prime brokers that specialize in one or cryptocurrency prime brokerage two specific prime services. However, service providers are recognizing the gap they can fill by bundling multiple products and services together.

• Please maintain a record of this NMLS Identification Number, as it will be used as your application reference number throughout the remainder of the process.
• Nexo Prime’s market-leading crypto lending platform is built to provide clients with liquidity on demand, whether it’s needed for margin trading or an OTC loan.
• [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.
• Both Advisories are remarkable for their brevity, considering the breadth of activity they encompass.
• As institutional interest in the digital asset market grows, so is the demand for more robust financial services.
• OSL Americas will also act as the regional hub for engagement with OSL’s growing list of SaaS partners.

Hidden Road Achieves SOC 2 Type 2 Compliance with AICPA and ISAE3000 Standards

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.

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 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.

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.

About Nexo PrimeNexo Prime is the proprietary prime brokerage platform of Nexo, the world’s leading digital assets institution. Nexo Prime gives institutional, corporate, and high-net worth investors all the tools necessary to trade, borrow, lend, and store their digital assets in a single product. Nexo Prime is created for a market that never sleeps and offers best-in-class, around-the-clock service to clients across the globe.

Capital introduction could be an especially valuable concierge service for native digital asset hedge funds who don’t have access to asset allocators such as endowments, foundations, pensions, fund of funds and family offices in traditional markets. Another way that digital asset prime brokers could differentiate would be to provide access to deals in which a banking division may participate – e.g. digital asset company IPOs or ICOs. Tying it all together, the ability to seamlessly trade spot and derivatives side by side with built-in financing can help bring down the costs of trading and investing in digital asset markets and make market participants more capitally efficient.

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.

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.

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.