Crypto Inches Closer to TradFi Infrastructure | Crypto

Crypto Inches Closer to TradFi Infrastructure

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– According to research from Acuiti, the main consequence of recent falls in crypto prices will be the market moving closer to the infrastructure in traditional finance.
– Half of the respondents in the second Acuiti Cryptocurrency Derivatives Management Insight Report think the main consequence of the downturn in crypto valuations will be the market moving closer to TradFi infrastructure.
– In addition the majority of respondents, 59%, expect a more severe regulatory approach will be the main medium to long term effect.
– The fall in valuations and the collapse of crypto hedge fund 3 Arrows Capital which required bailouts at associated firms has raised questions about how crypto markets operate.
– The survey found that the most critical concerns were financial stability of lenders and native prime brokers and risk management practices.
– However, the report also highlighted that it is notable that most firms in the market have withstood the shock.
– The majority of the network, 58%, also believe that banks will come to play a strong role in permissioned decentralised finance (DeFi).
– Enhanced Digital Group (EDG), which provides structured products to institutions in digital assets, raising $12.5m in a seed funding round in May this year.
– EDG was founded by bankers from traditional finance, including Chris Bae, a former management and investment committee member of UBSs $40bn-plus alternative investment group.
– Bae, chief executive of EDG, told Markets Media that the firm was founded on the thesis that the asset class would institutionalise.
– The volume of inbound enquiries from all over the world has grown remarkably according to Bae as crypto valuations have fallen and volatility has increased.
– EDG operates under the derivatives regulation of the US Commodity Futures Trading Commission and part of the funding round will be for regulatory capital.
– Bae compared the current crypto markets to frontier markets in traditional finance, which are a level below emerging markets.

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