The latest token sale to be hosted on the Binance Launchpad platform is prime brokerage firm TroyTrade. The move comes on the back of a year in which institutional players have firmly established themselves into the cryptocurrency markets and are increasingly seeking the kinds of products and services they use in the traditional financial markets. What are the implications for the broader cryptocurrency space and bitcoin?
TroyTrade To Take Off On Binance Launchpad
As the pioneer of the initial exchange offering (IEO), Binance has made a name for itself by selecting some of the most promising projects in the space for token sales on its Launchpad platform. TroyTrade is the latest, with the sale having completed on December 3. As with other recent token sales, Binance allowed holders of its BNB token to claim lottery tickets, so they could be in with a chance of winning a share of 800m TROY tokens.
TroyTrade successfully raised $4m from the Launchpad sale, further to a private sale in August in which the company attracted $10m from investment firms including BlockVC and Consensus Labs. It follows in the footsteps of many other projects that have successfully launched on the Binance IEO platform, including Bittorrent, Fetch.AI, and Matic Network.
It even appears that TroyTrade has already begun to leverage the Binance connection, as the exchange’s research arm has issued an overview of the project that alludes to partnerships with other Launchpad graduates. These include adopting Celer Network’s second-layer scaling solution along with an R&D partnership with the Harmony blockchain.
A Comprehensive Prime Brokerage Offering
Prime brokerage is a relatively new service offering in the cryptocurrency markets. In the broader financial markets, prime brokerage is dominated by big players such as Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc (NYSE: GS), which have yet to move into the cryptocurrency space. Therefore, given the increasing institutional demand, there’s a clear gap in the market for companies like TroyTrade.
TroyTrade’s offering comprises a master level trading platform that aggregates global liquidity from all major crypto exchanges, including Binance, Coinbase, BitMEX, Kraken, Huobi, and many more. The company also offers a sophisticated data and analytics platform providing an overview of the markets and blockchain transactions. Clients also have access to other services, including real-time fund transfer and settlement, margin borrowing, and OTC services. Finally, it’s a full-stack asset management solution offering co-location and low latency access service for high-frequency algorithmic traders.
TroyTrade isn’t the first to enter the market with trading tools for institutions. However, Binance clearly believes it holds an edge over the competition, while another potential competitor is Tagomi, which has recently been linked with Coinbase amid rumors of a potential $150m acquisition.
However, in the latest updates, both parties have denied any takeover is occurring, although Coindesk reports that a Tagomi source confirmed the companies have been negotiating on “doing business.” Given Coinbase is one of the crypto firms that’s started to compete in the institutional space, it will be intriguing to see what kind of collaboration may emerge.
Although there are some crossovers between the services provided by Tagomi and TroyTrade, the two companies don’t offer identical services. Tagomi provides a set of trading tools customized for institutional digital asset trading, whereas TroyTrade is positioning itself as a one-stop-shop for institutional clients wanting to move into the cryptocurrency space.
Overall, the emergence of prime brokerage services into the cryptocurrency markets is yet another example of the evolution of the space, which is coming to more closely resemble the traditional financial markets. It’s surprising how quickly this has occurred, given that cryptocurrency was almost the sole preserve of individual users until around 2017.
This changed once CME and Cboe started offering regulated Bitcoin-backed futures contracts, and since then, institutional interest has snowballed. Now that prime brokerage is on offer, further streamlining and simplifying digital asset investment for the pros, it’s likely to attract even more institutional money.
In terms of regulation, increasing institutional involvement is likely to be a good thing. US regulators have historically been notoriously frosty towards cryptocurrencies, but there are signs of a thaw. Bakkt finally received the nod from lawmakers this year to offer physically-settled Bitcoin futures.
Since opening its doors in September, the ICE-backed exchange has been aggressively pursuing growth, first into custodial services, and lately, overtaking rival exchange CME in the race to put crypto-backed options on the market. All this with the blessing of the US authorities.
Could this softening attitude mean that in 2020, US regulators finally give the long-awaited green-light to a Bitcoin ETF? Past form would say otherwise, but if institutional involvement is enough to reduce market manipulation, it’s not impossible.
A More Stable Bitcoin?
A common theory is that more institutional investment will eventually dampen Bitcoin’s volatility. Currently, that doesn’t appear to be the case. Although the price of Bitcoin was indeed far more volatile in its earlier days, the 2019 Bitcoin volatility index is currently showing similar patterns to 2016 and 2017, with 2018 proving the most volatile year of the last four. Perhaps this is because the involvement of big financial players is still relatively new. However, the upcoming Bitcoin mining reward halving is another factor that will play into price movements in 2020.
Binance rarely puts a foot wrong in its business decisions, and with the TroyTrade IEO, its money is clearly on prime brokerage as the next big thing in crypto. Even if the Tagomi acquisition doesn’t emerge, the reported talks are indicative that Coinbase believes the same. With the infrastructure in place, we can expect the trend for institutions moving into digital assets to continue well into 2020 and beyond.
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