In recent years, there has been a shift in crypto adoption worldwide – the largest financial companies and Wall Street biggies expressed their interest in crypto assets, particularly Bitcoin. Whether it was connected with the COVID-19 pandemic or the sharp growth of Bitcoin in 2021, the fact remains – institutional cryptocurrency trading is gaining momentum and further crypto adoption is inevitable.
In this article, we will discuss the role of institutional trading platforms and the reasons why many companies still avoid dealing with crypto.
Crypto Platforms in Institutional Crypto Trading
An institutional trading platform is software that allows companies to trade large amounts and focuses on providing the best user experience. An example may be WhiteBIT, Coinbase, Kraken, and other legal crypto exchanges.
Such platforms provide a range of institutional services for large traders:
- Market data and tools for analysis
- Custody
- Algorithmic orders
- Crypto market-making program
- Sophisticated trading tools.
When choosing a crypto exchange, institutions should focus on security tools and basic policy requirements. Institutional asset managers are under the scrutiny of regulators, so they require a robust trading environment that complies with the laws of the jurisdiction they trade.
Investors’ concerns about the safety of their private keys and assets stimulated platforms to implement custody solutions for their customers. There are tools like hot and cold crypto wallets, as well as warm wallets, allowing investors to hold their crypto safely and trade with the part of them simultaneously.
When it comes to regulations, it was under question in the early years of crypto adoption. Today many countries are taking steps on developing regulations for the crypto industry. When it is ready, exchanges will have to collect more comprehensive data from their customers’ trading activities. However, the best platforms for institutional trading of crypto stand out from the crowd by having licenses and undergoing audits.
What Prevents Greater Institutional Crypto Adoption?
Here are some of the reasons why many investors still don’t buy crypto:
- High volatility for the market
- The fragmented nature of digital assets
- Lack of clear regulations
- The danger of hacker attacks and leaks
- The lack of infrastructure for multiple order types and asset classes
- Lack of infrastructure helping to better manage crypto and fiat assets between banks, OTC desks, custodians, and exchanges.
Still, things are not that bad – prominent trading platforms have already leaped in developing infrastructure for institutions – API standards, support for multiple assets, reliable market data, and a wide range of services and tools.
Final Thoughts
Platforms for institutional crypto trading have taken a big leap in the last few years, however, there are still some concerns, keeping investors back. Once the majority of those concerts are solved, crypto adoption will drastically increase.