Prime brokerage is a reference term that has, for a number of years, gone hand-in-hand with financial markets. However, it has not been synonymous with cryptocurrencies and the crypto industry. It is a term that is used in the description of the bundled services offered by almost all banks and financial institutions.
It is a wonder therefore that it is of little application in the crypto sphere, or at least in the recent past. Despite the technological advancement of the crypto space, it is noteworthy that there is tendency of crypto to borrow from traditional currency world from which it was meant to be separate from.
It is no surprise therefore, that HNW enthusiasts will soon need to have their own all in one firms that will handle the management of their wealth cutting across the range of verticals, altcoins and blockchain divides. If you have no problem with trusting a third party to handle the custody of your crypto, it should not be a hard matter to allow them to invest your assets into the bargaining.
This will allow them to employ their investment in ways that will drum up the best return possible. Troy Trade is one such company that has its eyes on the lucrative market of Prime Brokerage. It has managed to secure about USD 10 million in forms of funding from block VC and consensus Labs among others. Troy trade is now promising its investors the direct market access that comes with all tier-one exchanges such as Binance and BitFinex.
It however seeks to be in competition with a number of the same above listed exchanges from whose liquidity they are looking to tap into. In the past two years, almost every giant U.S and global exchange has been in talks and deliberations with investors concerning laying on services such as custody, OTC and cutting trading fees for the higher volume traders. Among the companies that have made a major head start are Binance and Huobi, which have provided turnkey services that are primarily focused towards the specifics of institutional investors, but have as a result had to cut down their reputation as retail trading venues.
It should be noted that offering a collection of services under one roof is one thing, but it is another to be successful in the rest of the things that the company engages in. In considering prime brokerage, it is important to ask the question as to what exactly it will mean for crypto. First, it will bring lower volatility to the crypto market. As more money is drawn into the capital market sourced from institutional funds, some of the intra-day strategies are going to be tapered out of the industry. Secondly, there will also be greater protection. The deeper crypto entrenches itself into the financial system, it is going to be much harder for it to be done away with. Lastly, there will also be the outsourcing of new products as the demand for crypto and its derivatives will experience an uptake. More and more institutional investors will be looking to have synthetic assets from the lump sum Investments that they will have put into crypto.
For enthusiasts and buyers or even investors buying and selling cryptocurrency has for a long time been facilitated by such exchanges and platforms as Binance and the rest. Institutional investors will however have the tendency of demanding more and more specific solutions. This group of crypto enthusiasts will find their answers in prime brokerage. It remains to be seen which broker will be the pilot to take on the task and claim the throne in prime brokerage.