Global forex trading encompasses more volume than
any market in the world. Trading more than $5 trillion daily for numerous national
currencies, Forex markets require lightning-fast trade execution, pinpoint
spreads, and vast experience in one of the world’s most lucrative markets.
For Todd Crosland and Paxton Powers of the
renowned Interbank FX forex firm, decades of experience in the FX market was a
profound opportunity to translate into the maturing crypto markets.
And, indeed, the crypto markets still have some
necessary maturation ahead.
As recently detailed by CoinMetrics, spreads on crypto
spot exchanges can deviate from parity drastically during times of market
stress, particularly when waterfalls of leveraged positions on derivatives
platforms (i.e., BitMEX) are auto-liquidated in mere minutes -- further fueling
price momentum in the triggered direction.
Such an immature market microstructure doesn’t
even take into account the subpar order matching engines of many exchanges. For
example, BitMEX -- the leading Bitcoin derivatives platform -- has had persistent problems with its order-matching
engine, cited by some prop shops and institutions as being virtually unusable
during times of high activity.
As a result, it’s not surprising that
institutions are hesitant to dive into crypto markets, knowing full-well that
manipulation is much easier than the regulated and mature market infrastructure
of legacy financial markets.
With critical problems still facing the crypto
markets, Crosland and Powers decided to launch CoinZoom,
an institutional-grade crypto-fiat exchange that is fully regulatory-compliant
in multiple jurisdictions.
Building
the Necessary Exchange Infrastructure
A common axiom in financial markets is that
liquidity begets liquidity. Bootstrapping liquidity is challenging, and in the
crypto markets, it is largely a product of network effects where exchanges that
arose in prominence during the ICO craze of 2017 remain the industry leaders in
volume and liquidity.
However, for CoinZoom, the experience of
attracting liquidity is sure to be markedly different than its competitors in
the exchange arena.
“We’re a registered Money Transmitter and Money
Services Business in the US,” details CoinZoom CEO, Todd Crosland. “Together with
our connection to more than a dozen institutional OTC desks and market makers,
along with our relationships from Interbank FX, we have deep liquidity pools
integrated from around the world.”
The importance of liquidity cannot be
understated. Crypto exchanges jump through hoops to appear more liquid than
they are, falsifying order book data, encouraging wash trading, and introducing
trans-fee mining -- all in an effort to attract more traders. As a result,
cryptocurrency markets are rife with fake volumes, reported by Bitwise to be as
high as nearly 95 percent of total volumes.
Besides its robust relationships with financial institutions
as a boon for attracting initial liquidity, CoinZoom is also offering a suite
of financial products and services with its exchange to appeal to more
mainstream crypto users.
For example, the exchange is offering CoinZoom
Staking, where customers can earn passive income from 6% - 13% annually, by
just holding certain cryptocurrencies in their accounts. Staking will initially
be available for Dash (DASH), and Algorand (ALGO), with additional coins coming
soon. CoinZoom also offers ZoomMe, a free Peer to Peer, cross-border payment
gateway to instantly send both fiat and crypto, mobile trading applications,
and a Visa-backed debit card with rewards programs.
But attracting liquidity is not the only problem
with liquidity; it’s the capacity to support highly liquid activity.
Drawing from their decades of experience in the
ultra high-frequency world of FX trading, CoinZoom understands the type of
infrastructure required to support institutional-grade trading of assets.
Additionally, their knowledge encompasses the requirements for multiple types
of assets trading simultaneously, like what will be ongoing with their support
of stablecoins, cryptocurrencies, and security tokens -- issues not within the
purview of most other crypto exchanges.
“We deploy advanced order analytics efficiently
match and execute orders across the platform,” details CoinZoom CIO, Paxton
Powers. “Our AI system is a pattern recognition system that identifies and
alerts traders of pending market entry opportunities and how to react to market
movements in the cryptocurrencies they are trading.”
Increasingly, institutions and professional
traders are searching for an exchange platform that provides an all-inclusive
experience.
Where derivatives, spot trading, fiat gateways,
security tokens, and liquidity are all coalesced under one umbrella, is where
institutions will move. CoinZoom thoroughly believes that its platform is the
tipping point institutions have been looking for, and their vast experience and
relationships in the forex market should only serve them admirably in
convincing financial entities to jump into the crypto market.
Where maturity is necessary for the further
development of the crypto markets, the progress made by native crypto exchanges
appears insufficient to convince both regulators and institutions of the asset
class’ staying power so far.
CoinZoom appears poised to disrupt that
narrative, bringing with it a slew of high-profile experience and innovative
products.
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