Cryptos Are A Growth Opportunity for Brokers
FNG Exclusive Interview… FX broker tech solutions provider Gold-i stands out in our industry as one of the early advocates of digital assets. FNG talks to Tom Higgins, Gold-i’s CEO about the impact of the Binance fallout for institutional clients and the lessons to be learned from serious malpractice in the crypto world.
FNG: Hi Tom. The crypto world has been rocked by another huge scandal, with the CEO of Binance, the world’s biggest crypto exchange, pleading guilty to money laundering charges. Coming so soon after FTX’s downfall, do you think the crypto market remains attractive to institutional clients?
Tom: Both FTX and Binance grew into dominant players in a rapidly growing and largely unregulated industry. The allegations which have come to light about both organisations are shocking and undoubtedly have a negative impact on the industry. However, it’s important that we learn lessons from these situations in order to re-build credibility and increase the focus on investor protection.
The crypto market is maturing and these unscrupulous situations are major bumps in the road – but they shouldn’t detract from the fact the cryptos are an attractive and exciting asset class, with significant opportunities for institutional clients.
FNG: What are the lessons that institutional clients should learn from these situations?
Tom: The FTX debacle highlighted the importance of having separate, regulated custody providers. The Binance situation has taught investors another lesson – spread your risk.
Holding assets on exchange is risky – and relying on a single, dominant player such as Binance adds a further level of risk. If a firm like Binance, which had about 60% market share for crypto spot trading, can be so unscrupulous, how do we know who to trust? Of course, there are probably some good exchanges, run by people with integrity but the Binance situation has taught us that it is hard to be certain about who to fully trust.
Over-reliance on a single provider is a mistake – and it isn’t necessary. Using technology like Gold-i’s MatrixNET (our multi-asset liquidity management platform) enables clients to easily access deep crypto liquidity from multiple exchanges and market makers, spreading their risk amongst multiple counterparties. We have fully integrated our technology with regulated Prime Brokers, such as Hidden Road, which means that clients’ money does not need to be stored on exchange. This is a far more sensible approach for de-risking your assets.
FNG: Do you think the Binance situation will end up creating a strong market opportunity for Gold-i?
Tom: People’s confidence in Binance will undoubtedly be shaken. They won’t want to store assets in a company where the CEO has been fined for money laundering. However, after the initial fallout, I think demand for trading digital assets will be on the rise.
The institutional market has been evolving and investing heavily in this sector over the last year or so, increasing investor confidence and preparing for future significant growth. This is a market that is still maturing. Eventually, cryptos will become just another asset class, with the robust trading infrastructure and regulatory controls that we are used to seeing with FX.
Our MatrixNET technology, which facilitates both FX, CFD, and crypto liquidity aggregation and distribution, was developed with that market growth in mind. It enables brokers to quickly and easily add crypto trading to their FX platform. It is also aimed at crypto native clients, who can reap the benefits of MatrixNET by accessing the advanced functionality that the institutional FX world has come to expect.
I believe we already had a strong proposition in a growing market prior to the Binance situation. What’s happened at Binance will make people re-think about who to trust with their money and how to spread their risk. We are ideally placed to help them!