Finery Markets experienced a period of extensive innovation and growth.
December 29, 2022
In 2021, the crypto market boomed. The capitalization grew globally from $760 bn to $2.1tn with up to 295 million estimated users. These developments lead to a new dynamic regarding trading execution venues. The new “Crypto Trading Report 2022” by Finery Markets and PwC Switzerland gives an overview of the current trading landscape and analyses the key factors that impact the choice of exchange venues.
Survey results show that the right location is of paramount importance. Jurisdictions that promote the digital asset landscape and refrain from restrictive regulation have a high potential of becoming hubs for digital assets. In terms of having institutional investors that invest in digital assets and hold licenses in their country of domicile, Switzerland is one of the leading countries worldwide.
“Switzerland has become one of the world’s most favorable jurisdictions for digital assets trading venues by offering a robust legal framework that has been specifically adopted to ensure a high degree of legal certainty for DLT-based business models and that allows to take advantage of the respective particularities, a technology-neutral and approachable yet strict financial market regulator, a stable and secure political environment, the experience and reputation of having been a leading global financial center for many decades and, last but not least, by providing a great pool of well-educated international and local talents”.
Dr. Jean-Claude Spillmann,
Director at PwC Legal Switzerland
Several indicators hint an increase in the adoption of cryptocurrencies. For example, traditional financial actors show more and more interest for crypto space. 70% of the survey participants already trade digital assets. However, 60% stated that they would like to improve their current trading setup. This suggests that the market is not yet mature.
This is also cognisable when looking at the number of trading partners. 9% of institutionals only use a single venue for execution, probably to equally distribute the risk of a single point of failure. Over 25% of the survey participants have more than ten trading partners which shows a highly fragmented market and a need for consolidation.
When choosing an exchange, more than two third consider execution and liquidity quality as their key criterion. Regarding crypto instruments, 96% of the survey participants trade on spot markets but the majority combines this instrument with others, such as futures or options.
Currently, over 18’000 currencies are available for users through more than 400 exchanges. The monthly volume traded diverges considerably. Although most investments were made below $10 million dollars, the report shows a shift to increasing amounts where investors trade more than $10 million dollars in crypto assets. When it comes to choosing a venue to trade digital assets, every investor is likely to consider transactional factors.
90% of the survey participants trade on CEXs while around half trade on OTC. When trading in larger volumes the OTC desk solution is considered most effective. Despite regulatory uncertainty, a whole 30% trade on DEX.
“Building a trading setup is essential for long-term efficiency of business operations. At Finery Markets we are excited to be part of the research that is intended to help institutions navigate in the fragmented digital assets trading space”.
CEO of Finery Markets
This survey-based research was conducted by Finery Markets in Q4 of 2021 and was combined with qualitative inputs and insights from PwC Switzerland’s financial market and digital asset team. Of the 77 participants, about 25% are brokers, 22% hedge funds and 12% OTC desks. Download the full report here.
PwC Switzerland is the leading audit and advisory company in Switzerland. At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 156 countries with over 295'000 people who are committed to delivering quality in assurance advisory and tax services.
PwC Switzerland has over 3'380 employees and partners in 14 locations in Switzerland and one in the Principality of Liechtenstein. Find out more and tell us what matters to you by visiting us at www.pwc.ch. ‘PwC’ refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
Finery Markets is the first crypto-native Multi-Dealer Execution Venue. Since 2019, Finery Markets provides institutional clients with access to OTC desks across North America, Europe and Asia. Our priority is to deliver the best execution, improve trading standards, and create a transparent environment for the participants of the Digital Assets market with:
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