Tagomi, an NYC-based cryptocurrency brokerage and trading platform founded by Goldman Sachs Group and Union Square Ventures alums, claims to have developed a method of making it easier to “short” on crypto quickly.
According to a September 12 report by Bloomberg, the exchange now offers immediate access to multiple counterparties through its platform, which was founded in 2017. The platform also allows clients to lend or borrow Bitcoin and Ethereum, and to long or short trades on digital tokens.
We’ve made shorting and lending digital assets much easier. Excited to expand our prime brokerage offering for cryptocurrencies:https://t.co/LgmbBHqLbf
— TAGOMI (@tagomisystems) September 12, 2019
The piece described the act of shorting on crypto as “an arduous and labor-intensive process wrought with pitfalls” due to the fact that as it currently stands, “investors have to call a host of brokers and trading desks to find the best rates for borrowing and risk the market moving against them during the time it takes to put on a trade.”
“In other asset classes this would be done with one click.”
Tagomi COO Kevin Johnson said that shorting in crypto is more challenging than shorting on other kinds of assets. “In other asset classes this would be done with one click, but in crypto it’s very long and tedious to try and put a short on,’’ he told Bloomberg. This, in addition to the fact that cryptocurrency is such a volatile asset class, can have serious consequences: price slippage in crypto can be steep and quick.
Johnson also identified the problem in 2017, when the firm was launched: “There are a lot of things that we are used to having in other asset classes that yet to exist for crypto or frankly, are harder for crypto,” he told The Block.
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“In equities, if I am a client and I have a prime broker, I want to short IBM on Monday and then it magically happens. You don’t even have to know that behind the scenes, your prime broker is doing all these different things for you. In crypto, it’s very different.”
Dennis Chou, director of trading at Pantera Capital in San Francisco, sees the value in a platform that will allow clients to quickly short on crypto: “the crypto space is volatile, so if you can’t short, you’re missing part of the puzzle,’’ he said, adding that such a tool could also be useful for hedging, relative-value trades, and quantitative strategies.
Tagomi compiled $28M in funding as of March this year
Tagomi made headlines early in March of this year with news that it had managed to raise a total of $28 million in funding from Pantera Capital, Four Arrows, Multicoin Capital, Digital Currency Group, Peter Thiel’s Founders Fund, and a number of other investors.
Tagomi founder Jennifer Campell explained at the time that the funding was announced that Tagomi is “agency-only”: in other words, it offers consulting services for its clients to determine “how best to execute a trade or fund strategy.”
“Importantly, it also means that we can optimize for best execution,” she added. “Our clients are sophisticated investors who care strongly about execution and price transparency.”
Tagomi received a BitLicense from New York State’s Department of Financial Services later the same month. In a recent interview with Forbes, Campbell called for more regulation of the cryptocurrency industry: “We need more clarity on what the regulatory paths should be,” she said.
— TAGOMI (@tagomisystems) August 1, 2019
“…A lot of the current regulation is a force-fit, and it’s unclear which paradigm cryptocurrencies really fit into. So what happens is that instead of just picking a bucket, you have to apply every single bucket to it, which doesn’t make a lot of sense.”