Cryptocurrency exchanges are accelerating their push into institutional-grade services, reflecting the market's maturation. In Thursday's roundup, Coinbase officially launched an over-the-counter (OTC) trading desk for its Prime members, Huobi opened a beta version of its derivatives market, and Nasdaq revealed plans to launch regulated bitcoin futures contracts in partnership with VanEck. These developments highlight the convergence of traditional finance and digital assets.
Coinbase Launches Dedicated OTC Desk
Coinbase has launched an OTC trading desk exclusively for its Prime members, which include hedge funds and other agency-level businesses. The service went live earlier this month, enabling high-rolling clients to trade cryptocurrencies via direct communication methods such as Skype, email, and phone, following the common OTC model in other markets. Christine Sandler, head of sales at Coinbase, explained to Cheddar: “We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading. We felt this was a huge benefit to our clients to actually leverage both our exchange and our OTC business.” Notably, Coinbase claims it does not act as a counter-party in the deals it facilitates. The company plans to eventually offer delayed settlement and may integrate this service with its custodial offering.
Huobi Opens Crypto Derivatives Market
Huobi announced on Wednesday, Nov. 28, that it has opened a cryptocurrency derivatives market in beta, now available in select countries. The platform offers weekly and quarterly contracts, allowing traders to buy or sell at predetermined prices with up to 20x leverage. It includes investor protections such as a 20,000 BTC insurance fund to cover catastrophic security failures. “Cryptocurrency is a rapidly expanding and maturing market,” said Joshua Goodbody, General Counsel of Huobi’s Global Institutional team. “As part of that maturation, we see more and more sophisticated investors and traders from more established financial markets looking to gain exposure, including institutional players. At the same time, we think many experienced, successful cryptocurrency traders are looking for a broader range of investment tools than has traditionally been available. Huobi DM is tailor-made to address these sorts of needs.” The platform is currently not available to users from the U.S., Singapore, Israel, Iraq, Hong Kong, Cuba, Iran, North Korea, Sudan, Malaysia, Syria, Eastern Samoa, Puerto Rico, Guam, Bangladesh, Ecuador, and Kyrgyzstan.
Nasdaq Teams Up With VanEck on Futures
While cryptocurrency exchanges are targeting institutional traders, traditional financial operators are also crossing over. Nasdaq plans to launch regulated bitcoin futures-type contracts in the first quarter of 2019, thanks to a partnership with MV Index Solutions, a VanEck company with about $14 billion invested in its products. MV Index Solutions recently launched an OTC Spot Index. The collaboration was revealed by Gabor Gurbacs, director of digital asset strategies at VanEck/MVIS.