The institutional acceptance of crypto around the world has accelerated significantly recently, developing hand in hand with better-defined regulation. Here, BlockFills CEO Nick Hammer discusses the reasons for crypto’s increasing institutional usage and some of the latest products responding to that demand.
What trends are you seeing now in the digital asset space?
We’ve been seeing increased involvement from institutional players in this space such as hedge funds, family offices and asset managers, which underscores the growing credibility and maturity of the digital asset space. Institutional activity brings significant capital, greater liquidity and stability to this market. It also drives mainstream acceptance and necessary regulatory clarity.
To that end, governments and regulators around the world are developing more defined frameworks and focusing on investor protection. This helps build trust and ensures compliance in various jurisdictions. This has also been helpful for us as we navigate the global regulatory landscape and launch offices in South America and the Middle East. BlockFills also has a London-based affiliate, Basis Capital Markets UK Ltd, which is regulated by the Financial Conduct Authority (FCA). The move towards regulatory certainty has been beneficial for the major players in this space.
DeFi also continues to grow, offering decentralized alternatives to traditional financial products like lending, borrowing and trading. This enables greater financial inclusion, efficiency and transparency. Many central banks are also exploring or developing their own digital currencies in response to the rise of cryptocurrencies and stablecoins. This could impact the future of money by creating a more digitized financial ecosystem.
Finally, we are also seeing a rise in the use of stablecoins. Stripe introduced a new payment option allowing customers to pay U.S. businesses in the USDC stablecoin, and this growing trend is reshaping how assets are traded and stored.
Why have we seen more institutional adoption of crypto?
There’s been a lot of movement from regulators to provide institutional traders more confidence when accessing the digital asset space. The U.S. has adopted a strategic Bitcoin Reserve policy at both the federal and some state levels, the SEC and CFTC have created a joint crypto regulation advisory committee and several crypto ETFs have been approved, with more, including Bitwise’s application for an XRP ETF, under consideration.
We have also seen the development of institutional custody solutions for crypto, which builds further confidence in the digital asset space. BlockFills has partnered with leading players that have invested heavily in custody solutions, insurance and regulatory compliance. These are only a few of the steps we take to safeguard assets against hacking and theft, since long-term sustainability is important to us.
Finally, there has been a real trend to tokenize traditional financial products like stocks, bonds and commodities. Institutional and professional investors are attracted to this sort of offering due to its fractional ownership and increased liquidity, which provide unique opportunities apart from traditional investment vehicles.
As the market matures, how are you looking at the landscape of product opportunities or deficits?
Having both a spot and derivatives* offering enables BlockFills to provide unique trading opportunities and provides traders the opportunity to explore various strategies. As an OTC desk, we have customizable products with a robust variety of underlying digital assets, including BTC, ETH, SOL, XRP, USDT, LTC, BCH and more. We are not only dealing with the major coins.
Legacy products and technologies may have restraints that are holding digital asset evolution back. Crypto demands same-day settlement, 24/7 markets and non-fiat as collateral, so BlockFills is exploring how best to meet the needs of digital asset traders while leveraging traditional building blocks.
BlockFills also offers cash-settled as well as physically delivered products to meet the needs of all sorts of professional and institutional traders.Turnkey solutions from BlockFills can get firms up and running in the digital assets businesses so as not to experience FOMO.
The digital asset landscape is very unique in that it was developed by retail investors and has evolved for institutional markets. We owe credit to the first movers in the digital asset retail space and aim to capture some of their innovative spirit when developing our products.
Your firm recently launched the BlockFills CoinDesk 20 Options Market. Can you tell me more about that?
BlockFills provides institutional-grade liquidity to the CoinDesk 20 Index, which measures the performance of leading digital assets and applies a capped market capitalization weighted methodology to ensure portfolio diversification. Additionally, we offer the BlockFills CoinDesk 20 Options Market product, answering the demand for diverse and tradeable digital assets products beyond BTC and ETH ETFs. We have heard the demand from qualified institutional market participants for a foundational reference index to trade, invest, and measure performance in, and are thrilled to provide them with a solution.
Prominent digital asset manager and multi-strategy crypto hedge fund, Hyperion Decimus, initiated the first transaction of the product in January of this year.
What’s next for BlockFills? Where should people go for additional information?
We are working strategically with partners to provide an enhanced level of service for digital asset trading. We recently collaborated with CQG, a leading global provider of high-performance technology solutions for market makers, traders, brokers, commercial hedgers and exchanges, to bring industry-leading, reliable pricing and deep liquidity to their vast client base. And our market participants benefit from the ability to use CQG’s institutional-grade technology and trading tools.
We are also expanding our relationships with key industry players such as custody provider Fordefi, London-based banking group BCB, CQG, CoinDesk Indices and others to enhance the digital assets experience.
BlockFills will also be launching global offices in Dubai, Brazil and the U.K. Those seeking more information can visit BlockFills.com.
Disclosure:
*Derivative Products available to Qualified Counterparties Only. For US Persons, client is an Eligible Contract Participant (“ECP”) as defined in Section 1a(18) of the Commodity Exchange Act and related guidance. Non-US Persons must qualify as an Eligible Professional Client.
The information in this article is not to be construed as an offer to sell or a solicitation or an offer to buy contracts for difference (CFD), cryptocurrencies, futures, foreign exchange, or options on the aforementioned. All information contained herein is believed to be accurate, Reliz Ltd makes no representation as to the accuracy or completeness of any data, statistics, studies, or opinions expressed and it should not be relied upon as such. The risks of trading can be substantial. Each investor must consider whether this is a suitable investment. Those acting on this information are responsible for their own actions.
Authors’ views and opinions are their own and not associated with CoinDesk Indices. The interview was conducted by CoinDesk Indices and is not associated with CoinDesk editorial.
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