Group Co.
Bringing Cryptocurrency into the Institutional Order Flow
Traders Magazine Online News, August 2, 2018
With more than 500 cryptocurrency exchanges in the world today and about 1,500 cryptocurrencies, digital assets are truly a global market that has grabbed the attention of everyone from the retail investor to major institutions. But with a market that has literally pulled in millions of individual accounts globally, it has brought in a small percentage of traditional institutional players.
At the FIX Trading Community event in Chicago on July 18, 2018, a panel of four cryptocurrency firm executives spoke candidly about why some institutions have moved into the space and why there aren't more banks, hedge funds, proprietary trading firms and large institutional players in the space today. What emerged is a picture of a marketplace with tremendous momentum and interest, yet a financial sector that is still young and faced with a number of infrastructure, qualitative and regulatory issues. There are also a number of challenges facing the FIX community when it comes to industry adoption of FIX technology. All of these topics were addressed by the lively panelists who see incredible potential, growth and opportunity in the space.
“The institutionalization of crypto has been building up,” said Hu Liang, Founder and CEO of Omniex. “Obviously, the retail phenomenon over the past year certainly pushed some institutions over the cliff or got them to pay closer attention to it. Institutions realize that there is long-term intrinsic value to crypto.”
The tokenization of assets, according to the panel, will happen in the coming months or years. The technological growth and advances wrought by the Internet, is pushing financial innovation into new sectors, well beyond traditional finance.
“It is not going away and is here to stay,” said Sean Ristau, Co-Chair Digital Currency Working Group, FIX Trading Community, Director of Exchange Integration and Education at Bcause. “It is a changing style of investment.”
But what is needed is critical infrastructure which includes everything from world-class exchange platforms that can handle trading at stock and futures exchange speeds. Panelists said that many of the top spot exchanges today use FIX API, but not all and not in a standardized manner across the crypto markets. The FIX Trading Community is trying to address that very issue with its Digital Currency Working Group. The Group continues to attract more members with a goal to bring a best-practices framework for FIX in the crypto space. Group leaders are working on that framework now and will present it back to the group to gather feedback. The goal then is to publish a FIX protocol guide for crypto by the end of the year.
“The foundations are already there for messaging,” Ristau said. “It's really applying those one-off cases to FIX.”
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