Video: Top Experts Debate the Future of Institutional Crypto Trading
- Regulatory barriers must be addressed before institutional traders embrace tokenized assets.
On Day 2 of last month's iFX EXPO Asia 2019, some of the biggest names in institutional crypto trading weighed in on the outlook for the upcoming year. Two major trends covered during the Institutional Traders Round Table were the continued growth of tokenized non-spot products and the future of stablecoin.
https://youtu.be/HuWmLadSG7Q
Non-spot instruments see growth
The panel opened with a discussion about bringing OTC derivatives to the Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe . Jethro Glover, Head of Asia Business Development for the crypto asset management platform Caspian, said, “We’re adding the OTC side of things to the platform. So, that’s where we also see the growth, in the OTC side.”
Glover pointed to a major decline of interest in exchange diversification. As an example, he explained that Caspian clients are no longer asking for access to dozens of exchanges, and instead have concentrated their efforts on the top 10 offerings.
Stablecoins increase market penetration
The panel was also very positive about the rollout of new stablecoin currencies. The development of these instruments in a wide variety of currencies provides a strong opportunity for trading, fund management, and the creation of investment baskets, although there is still a lot of competition and many of the coins may not survive long-term.
Gary Bernstein, founder and CEO of CoTrader, was particularly optimistic about Dai, which is the first stablecoin compatible with Ethereum smart contracts. “Dai, because it’s on Ethereum, you can program it to do various things. So, I think that has an extra dimension completely than stablecoin that you can’t do that with,” explained Bernstein.
Institutional traders demand new technology
The current platforms are built for retail, and advanced traders need a more sophisticated interface, including built-in institutional grade compliance features, and a blend of OTC and fiat trading. Some other options explored for encouraging institutional engagement included smart escrow for increased Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent , market surveillance for greater transparency. Additionally, security issues such as the recent QuadrigaCX disaster have institutional traders stressing the importance of maintaining insurance through custody.
STOs surface as potential ICO alternatives
The panel was pessimistic about the injection of new institutional money into the market, expected investment to be centered around arbitrage for the near future. Although the prior success of ICO offerings confirmed the demand for blockchain funding strategies, the lack of regulation was problematic. Alternatives such as regulated STOs, and dICOs that release funds slowly and allows refunds, were mentioned, but have not yet gained momentum.
Institutional crypto trading remains weak
The panelists agreed that institutional adoption of digital instruments would require market regulation, access to liquidity, and the development of trading platforms which simplify adherence to compliance. The expectation is that 2019 will be quiet for institutional investors, and decentralized exchanges will see a period of aggregation as larger players take over struggling companies.
For in-depth coverage of the outlook for trading in Asia, visit the official iFX EXPO YouTube channel to watch video recaps of all of the iFX EXPO Asia 2019 sessions.
On Day 2 of last month's iFX EXPO Asia 2019, some of the biggest names in institutional crypto trading weighed in on the outlook for the upcoming year. Two major trends covered during the Institutional Traders Round Table were the continued growth of tokenized non-spot products and the future of stablecoin.
https://youtu.be/HuWmLadSG7Q
Non-spot instruments see growth
The panel opened with a discussion about bringing OTC derivatives to the Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe . Jethro Glover, Head of Asia Business Development for the crypto asset management platform Caspian, said, “We’re adding the OTC side of things to the platform. So, that’s where we also see the growth, in the OTC side.”
Glover pointed to a major decline of interest in exchange diversification. As an example, he explained that Caspian clients are no longer asking for access to dozens of exchanges, and instead have concentrated their efforts on the top 10 offerings.
Stablecoins increase market penetration
The panel was also very positive about the rollout of new stablecoin currencies. The development of these instruments in a wide variety of currencies provides a strong opportunity for trading, fund management, and the creation of investment baskets, although there is still a lot of competition and many of the coins may not survive long-term.
Gary Bernstein, founder and CEO of CoTrader, was particularly optimistic about Dai, which is the first stablecoin compatible with Ethereum smart contracts. “Dai, because it’s on Ethereum, you can program it to do various things. So, I think that has an extra dimension completely than stablecoin that you can’t do that with,” explained Bernstein.
Institutional traders demand new technology
The current platforms are built for retail, and advanced traders need a more sophisticated interface, including built-in institutional grade compliance features, and a blend of OTC and fiat trading. Some other options explored for encouraging institutional engagement included smart escrow for increased Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent , market surveillance for greater transparency. Additionally, security issues such as the recent QuadrigaCX disaster have institutional traders stressing the importance of maintaining insurance through custody.
STOs surface as potential ICO alternatives
The panel was pessimistic about the injection of new institutional money into the market, expected investment to be centered around arbitrage for the near future. Although the prior success of ICO offerings confirmed the demand for blockchain funding strategies, the lack of regulation was problematic. Alternatives such as regulated STOs, and dICOs that release funds slowly and allows refunds, were mentioned, but have not yet gained momentum.
Institutional crypto trading remains weak
The panelists agreed that institutional adoption of digital instruments would require market regulation, access to liquidity, and the development of trading platforms which simplify adherence to compliance. The expectation is that 2019 will be quiet for institutional investors, and decentralized exchanges will see a period of aggregation as larger players take over struggling companies.
For in-depth coverage of the outlook for trading in Asia, visit the official iFX EXPO YouTube channel to watch video recaps of all of the iFX EXPO Asia 2019 sessions.