Nomura’s digital asset subsidiary Laser Digital has invested in two digital asset firms that borrow concepts from TradFi. ClearToken is creating a central counterparty (CCP) to remove bilateral counterparty risk. And Crossover Markets has just launched an execution only network, so institutional crypto investors can choose their own custody, brokerage and credit options. The two investments appear complementary, with one targeting fast low risk crypto trade execution and the other addressing post trade risks.
Laser seems to have a closer relationship with ClearToken which it incubated.
ClearToken’s CCP will centralize clearing, settlement, collateral and risk management arrangements similarly to CCP’s for conventional assets. Hence instead of clearing and settling directly, investors, exchanges, brokers, market makers and custodians will settle with the CCP.
“Digital asset technology has the potential to revolutionize financial markets offering enormous innovation in efficiency and transparency but we have also seen that it is a leap of faith to expect Defi to solve all market problems,” said Niki Beattie, Chair of ClearToken. “Clearing houses will remain an essential market participant; their integration into the digital asset market structure can bring much needed stability and allow the innovative nature of this sector to continue within the regulated framework required to fulfill its transformative ambitions.”
Apart from risk reduction, a critical aspect is the centralization of collateral management. In other words, rather than having capital locked in multiple venues, it can be pooled in a single CCP, which should free up capital. UK-based ClearToken aims to take advantage of regulatory developments in the country to become a regulated CCP. Although what that might look like is not yet clear.
“ClearToken’s initiative has the capacity to remodel a marketplace fraught with bilateral risk, transforming this market as we know,” said Dr. Jez Mohideen, CEO of Laser Digital.
Meanwhile, on Monday Crossover launched CROSSx, its execution-only cryptocurrency Electronic Communication Network (ECN), claiming to have one of the fastest crypto trading engines with a sub-20 microsecond matching engine.
It says its solution enables clients to create dark or lit pools and supports anonymous, disclosed and semi-disclosed trading. CEO Brandon Mulvihill was previously Global Head of FX Prime Brokerage at Jefferies and CCO Anthony Mazzarese is a former colleague there.
Nomura created Swiss-based Laser Digital in September last year. Apart from being an early stage investor, it is also involved in trading and asset management. Nomura’s investment in custody startup Komainu three years back is now under the Laser Digital umbrella, which includes investments greentech firm AllInfra, Bullish and more recently DeFi protocols Orderly and Infinity Exchange. Outside of Laser Digital, Nomura is a participant in Fnality, which is planning to launch a token-based settlement network starting in the UK using a synthetic CBDC.