Institutional-grade solutions enter the cryptocurrency markets
By Robert Dykes, CEO of Caspian
Cryptocurrency trading has come a long way since Hal Finney received the first Bitcoin in 2009. Since then, a series of burgeoning markets for hundreds of different cryptocurrencies have developed.
As interest in cryptocurrency markets grows, institutional investors are looking to jump into the cryptocurrency pond, but struggle with the operational platforms currently in place.
What’s holding back institutional investors?
The evidence suggests that cryptocurrency investments are booming and that this trend will only increase in the coming years. According to Coinmarketcap, as of February 2018, daily exchange trading volumes across crypto assets already exceeded $50 billion. Over the next 15 years, RBC Capital Markets predict that this volume will grow to $10 trillion.
However, cryptocurrency investors face a whole host of issues if they want to trade in a professional capacity. One of the key issues is unreliable trade execution, as a result of the fragmentation of crypto-exchanges that exists today.
To implement a diverse investment strategy, investors need to execute trades across many exchanges. At present, there’s no other way to do this other than by keeping all your exchange accounts open and monitoring them through different interfaces. Maintaining target allocations in this way, which institutional investors must do, is very difficult. Moreover, this fragmentation of crypto-exchanges creates liquidity and slippage issues, as even small trades can consume liquidity and cause prices to slip.
Then there is the issue of risk management, which is a crucial element of trading in any asset class. Crypto-exchanges are vulnerable to hackers and the ones that exist today lack many of the security features offered by trading platforms in traditional markets. These include experienced customer support and risk management capabilities.
Finally, but equally important, are audit and compliance needs. While institutions must monitor and retain meticulous details on their traders’ positions, triggers and pre-trade limits, the features of crypto-exchanges and the need to work across multiple exchanges creates a challenging situation. As a result, many funds are trading and monitoring crypto-investments through spreadsheets.
Investors need a solution that provides professional-grade trade order, execution, compliance and risk management features to meet their regulatory and operational needs.
A full-stack crypto asset management solution
Caspian is a joint venture that provides institutional and sophisticated investors with a full-stack crypto trading and risk management platform designed to solve the specific problems facing crypto investors. It aggregates prices, bid/ask information, orders, positions, accounts and execution from multiple crypto-exchanges on a single platform.
Caspian provides investors with a comprehensive Order and Execution Management System (OEMS), Portfolio Management System (PMS) and Risk Management System (RMS), backed by experienced customer support. Users have the ability to act on this information by sending orders to exchanges individually or using the Smart Order Router. It achieves this by providing sophisticated connectivity and interoperability across various cryptocurrency exchanges. Caspian currently connects to 10 major crypto-exchanges, including BitMEX, Gemini (FIX), GDAX (FIX), Bitfinex, Poloniex, BitFlyer and Binance. By Q3 2018, Caspian plans to add up to 40 additional trading platforms.
Caspian’s main aim is not to disrupt existing crypto-exchanges, but to drive exponential growth in crypto-trading participation amongst institutional and sophisticated investors. In facilitating crypto-investing for a large number of entrants, Caspian will help to increase liquidity and volume within the sector.
We’d love to hear from you. Please leave a comment or chat us up on Telegram. If you want to learn more about our platform, please visit us at caspian.tech.
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Caspian is a joint venture between Tora and Kenetic, who have successful track records in asset management and cryptocurrency investing. Tora is a leading supplier of asset management technology, including an OEMS that averages monthly notional equity volume exceeding US$100 billion and is currently responsible for 17% of Japanese institutional equity trading volume. Kenetic is a blockchain firm committed to expanding the development and adoption of blockchain platforms through investments, advisory services, community and technology.
