March 31, 2020

Crypto Trading Not Yet Institutionalised

Although there has been a great deal of noise about the potential of crypto and how some institutions are adding these assets to their portfolios, a recent survey highlights that 80% of traditional trading institutions are yet to enter this market.

Actuiti reports that less than a fifth of traditional trading institutions trade digital assets such as Bitcoin and Ether. However, it identified growing interest from these traditional trading firms to either enter the market or expand their current coverage to trade more cryptocurrencies.

Of the traditional trading firms that do not currently trade digital assets, 45% will consider the opportunity again in the next six months, with 97% planning to revisit the idea within two years.

Actuiti conducted the survey of 86 executives from trading firms and institutions, specialist crypto traders and sell-side service providers.

“Traditional firms that traded digital assets tended to limit their coverage to bitcoin derivatives on traditional markets, such as CME, while specialist crypto firms traded on a broad range of markets,” said Will Mitting, Managing Director of Acuiti. “We also found a growing split between demand from traditional trading firms to broaden their coverage of digital assets and the willingness or ability of sell-side firms to provide access.”

One of the key findings of the Acuiti study was that firms trading on multiple digital assets exchanges were more profitable than those trading one or two. To enable wider adoption, clearing firms and other service providers will have to expand their offerings to include a range of markets. However, most sell-side firms are reluctant to offer access to a market unregulated by their home authorities.

Ongoing initiatives in the US, EU and the UK are putting in place a more formal regulatory structure for specialist venues, which should lead to growth.

“The future of digital asset trading is likely to be fragmented with opportunities created by market structure as much as market movement,” said Will Mitting.

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