Over the weekend news from Coindesk of Irish cryptocurrency exchange Bitsane (website offline) apparently pulling a runner with users’ funds is just the latest in a long line of examples illustrating the need for evolution in digital assest market structure. This incident comes on the heels of earlier reporting by Coindesk of Polish crypto exchange Coinroom doing the same thing. SIPC and FDIC protections in the US, the UK FSCS, various compensation schemes in Germany and throughout the EU and elsewhere protect investor funds and assets when an institution fails in its custody duty to its customers. Unfortunately, with current market structure, similar protections do not exist for the crypto buy-side.
With professional traders needing to access many pools of liquidity globally, the risks of exposure to such an event are magnified. The current market structure for digital assets requires traders to trust exchanges with custody of their digital and fiat assets but traders must consider the additional risks associated with the exchange’s banking relationships; often in far flung locales such as Estonia, Georgia or Ukraine. And, how does one even begin to conduct due diligence on a bank in a regulatory regime that’s unfamilar to most professional market participants.
Traditional asset classes have solved many of these issues through third-party custoday, clearing and settlement. NextPrime’s innovative solution brings similar structure to the digital asset market by letting traders post a single pool of capital with fully regulated, first-world custodians and access buying power across any of the exchanges on our network with intraday settlement in real fiat.
Contact us to learn more about our solutions for traders of digital assets or to inquire about adding your exchange to our platform.