Exclusive FNG interview… FX broker technical solutions provider Gold-i stands out in our industry as one of the early proponents of digital. FNG talks to Tom Higgins, CEO of Gold-i about Binance’s impact for institutional clients and the lessons to be learned from serious wrongdoing in the crypto world.
FNG: Hello Tom. The cryptocurrency world has been rocked by another massive scandal, with the CEO of Binance, the world’s largest crypto exchange, pleading guilty to money laundering charges. Coming so soon after the fall of FTX, do you think the crypto market remains attractive to institutional clients?
Someone: Both FTX and Binance have grown into dominant players in a fast-growing and largely unregulated industry. The allegations that have come to light about both organizations are shocking and will undoubtedly have a negative impact on the industry. However, it is important to learn from these situations in order to rebuild credibility and increase the focus on investor protection.
The cryptocurrency market is maturing, and these rogue states are significant bumps in the road – but they shouldn’t detract from the fact that cryptocurrencies are an attractive and exciting asset class, with significant opportunities for institutional clients.
FNG: What are the lessons for institutional clients to learn from these situations?
Someone: The FTX debacle highlighted the importance of having separate, regulated custody providers. The Binance situation has taught investors another lesson – spread your risk.
Holding assets on an exchange is risky – and being based on a single, dominant player like Binance adds an extra layer of risk. If a company like Binance, which had around 60% market share for spot crypto trading, can be so unscrupulous, how do we know who to trust? Of course, there are probably some good exchanges out there, run by people with integrity, but the Binance situation has taught us that it’s hard to be sure who to fully trust.
Over-reliance on a single provider is wrong – and unnecessary. Using technology such as Gold-i’s MatrixNET (the multi-asset liquidity management platform) allows clients to easily access deep crypto liquidity from multiple exchanges and market makers, spreading risk across multiple counterparties. We have fully integrated our technology with regulated Prime Brokers such as Hidden Road, meaning that client funds do not need to be stored on the exchange. This is a much more sensible approach to de-risking your assets.
FNG: Do you think the Binance situation will end up creating a strong market opportunity for Gold-i?
Someone: People’s confidence in Binance will undoubtedly be shaken. They will not want to store assets in a company where the CEO has been fined for money laundering. However, after the initial result, I think the demand for digital asset trading will be on the rise.
The institutional market is evolving and has invested heavily in this sector over the last year or so, increasing investor confidence and preparing for significant growth ahead. This is a market that is still maturing. Eventually, cryptos will become just another asset class, with the robust trading infrastructure and regulatory controls we’re used to seeing with FX.
Our MatrixNET technology, which facilitates the pooling and distribution of FX, CFD and crypto liquidity, was developed with this market growth in mind. It allows brokers to quickly and easily add crypto trading to their FX platform. It also caters to native crypto clients, who can reap the benefits of MatrixNET by accessing the advanced functionality that the institutional FX world has come to expect.
I believe we already had a strong proposition in a growing market before the Binance situation. What happened to Binance will make people rethink who to trust with their money and how to spread the risk. We are in an ideal position to help them!