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Decomplexification in the Crypto Sector to Aid Adoption by Institutional Traders

Dealing with a complex system can be very tough, which is why, regardless of the industry or sector in which you operate in, tackling the problem of complexity is usually a top priority for every business.

The same applies to the stock market, exchanges, decentralized applications (Dapps), and, more precisely, the crypto trading market, which is arguably far more complicated than traditional trading markets.

The reason for this complexity can be attributed to different factors ranging from the so-called gas fees, limited crypto liquidity, and issues relating to scalability among several others.

While institutional traders have been waiting for the right moment to transition from the traditional trading market to the crypto trading market, they have been caught between the new trading environment’s complexity and the endless possibilities that it offers.

As a result, there has been some dragging of feet by institutions and institutional traders. However, this may cease to be a thing, given the involvement of FalconX who are set to simplify institutional crypto trading for their partners.

FalconX is a US-based trading platform targeted at institutional traders who are looking to dive into the crypto trading market. The 2018-founded startup leverages technology that provides the infrastructure for the future of digital assets, and enables seamless price discovery, trade execution, and transfer of value.

During an exclusive interview with DailyCoin, Austin Reid, the Chief of Staff at FalconX spoke on the need to decomplexify the crypto trading market in order to accommodate institutional traders.

According to Reid, the startup’s ultimate goal is to decrease the complexity of getting up and running in the cryptocurrency market for institutions that are looking to get active in the crypto trading space.

To achieve this, FalconX is addressing major setbacks like limited crypto liquidity and the lack of scalable infrastructure that has hindered institutional adoption of cryptocurrencies over the years:

“We provide partner institutions with great pricing, on-spot cryptocurrency liquidity along with reliable and scalable infrastructure. We also work with them to provide short term fixed-rate financing around those trades to increase the efficiency of the strategies that they’re running. 

Ultimately, we want to decrease the complexity of getting up and running in the cryptocurrency market for institutions that are looking to get active in the space and continue to build allocations or run strategies,”

Reid explained.

Reid further noted that focusing on institutional crypto trading at its early stage wasn’t exactly an attractive thing to execute, especially when compared to the retail counterpart, which was easier to handle.

More so, according to Reid, given that cryptocurrencies have recently gone even more mainstream than they were a few years ago, more emphasis must be focused on institutional trading.

The Issue of Slot Trading

Beyond helping them to navigate the crypto market and solving the complexity involved with institutional trading, FalconX is also bent on “increasing the efficiency of its partners’ abilities in the crypto market.”

In trying to explain what he means, Reid compared what institutional crypto trading looked like prior to FalconX, and how most institutional traders would have had to deal with inventory management as their biggest issue.

“Let me describe what institutional crypto trading looked like before FalconX. You’d basically have to on-board a number of different exchanges, so if you are an institution that’s coming into the cryptocurrency market, you may need to on-board five, ten, fifteen different exchanges, or even more, depending on divestment approach.

More so, you need to complete the on-boarding processes for each of these exchanges, after which you then integrate to each, and perhaps one of the bigger issues would surface when you would have to maintain your inventory across various venues,”

Reid explained.

FalconX  has been able to tackle the problem by combining a variety of solutions, including one that addresses the onboarding issue, into a single platform.

Furthermore, Institutional traders can deal with inventory management concerns by simply trading against FalconX (which have aggregated several other crypto assets out there) as a single counterparty.

Because they won’t be trading on separate venues, this sort of trading model, according to Reid, allows institutional traders to maintain their post-trade settlement technique used in the traditional institutional trading market, enhancing their efficiency much more.

Other ways by which FalconX is improving its partners efficiency is by simplifying the overall trading experience leveraging its web app, and APIs all of which are designed to deliver great user experience.

On The Flipside

  • FalconX is still in the early stage of a megatrend of institutional adoption, suggesting that the project is still not at its mature state, and as such, will constantly evolve to adapt to new trends as they surface.
  • Regulatory clarity is one approach to address the problem of complexity involved in institutional crypto trading, although it may take some time to achieve.

Why You Should Care?

There are numerous platforms attempting to handle the complexities of institutional crypto trading, but only a few, such as FalconX, are offering meaningful solutions, particularly one that solves inventory management.

Watch the entire interview here:

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    This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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