Institutional Crypto Trading: Current Situation and Regulations Issues

Over the past couple of years, the scope of the crypto industry has grown, as this sector started to receive mass adoption, especially among institutions. In 2021, the crypto adoption rate increased to 800%. The blockchain industry has become so large that it is impossible to ignore it today. Thus, governments are now working on developing rules and laws that may be imposed on crypto traders and platforms offering such services. In El Salvador, crypto was adopted at the state level. The UK and US started to develop frameworks on crypto integration in financial systems.

In this article, we will discuss crypto adoption and institutional services offered by institutional crypto exchange platforms that push this adoption even further. 

Signals of Institutional Crypto Adoption

As with any other industry, crypto trading infrastructure was initially a space for retail traders and individual investors. However, the desire to catch up with innovations and technologies stimulated institutions to tap into and integrate blockchain technologies in their services and products. Institutions in crypto may be roughly divided into the following groups:

  • Hedge funds (Pantera Capital Management, Grayscale Investments)
  • Tech companies (MicroStrategy)
  • Banks (Goldman Sachs, JPMorgan Chase, Revolut)
  • Businesses, tech companies (Tesla).

Institutional Services and Solutions

Trading large amounts requires specific solutions in safety, custody, and compliance, as well as trading tools, designed specifically for investors. The market offers several institutional-grade platforms, like WhiteBIT or Coinbase, that provide a range of features for clients:

  • Market maker trading platform
  • Range of supported assets
  • Trading tools (derivatives, options)
  • Research and data analysis tools
  • Compliance with regulations, KYC, AML tools
  • High-performance APIs
  • etc.

Factors Constraining Institutional Trading of Crypto

The main barriers for institutions include the lack of regulations, infrastructure, and trust in the crypto sector. Investors need to be confident about the place they trade in, and regulatory clarity plays an important role in it. Integration of clear rules on crypto trading will create a safer environment for investors and encourage them to join this market. After all, institutions will pour billions of dollars into crypto once they are confident about this industry’s regulations.

Final Thoughts

Institutional adoption of crypto has already started and it does not seem to be slowing down. Tech and financial giants demonstrate their confidence in the crypto industry, stimulating other institutions to join. However, uncertainty with regulations still holds back many companies. The problem of lack of regulations should be the main impetus for the development and introduction of regulations, that will make the crypto sector more orderly and stable. Having access to a legal institutional trading platform that complies with regulators, traditional financial companies will participate in crypto more actively.

Leave a Comment