Today inter-dealer broker TP ICAP announced that the UK’s Financial Conduct Authority had licensed its crypto marketplace Fusion Digital Assets as a crypto-asset exchange.
The company only plans to offer services to institutional participants. It will use its own OTC electronic platform for trade execution and provide digital asset custody services, initially via Fidelity Digital Assets, although it plans to expand the options.
It will aggregate liquidity from leading market makers and its own client base.
“Despite growing demand from our traditional client base, until now the wholesale digital assets market has lacked the credible infrastructure and assurance necessary for them to allocate capital,” said Duncan Trenholme, Co-Head of Digital Assets at TP ICAP Group.
“Over time, we believe blockchain will lead to the tokenisation of traditional asset classes. This will result in a more efficient, automated, and risk-mitigated trading and settlement process for financial markets. Fusion Digital Assets positions us well to grasp the opportunities that this change will bring.”
A few major crypto market makers are subsidiaries of high frequency trading firms or mainstream market makers such as Cumberland DRW, Jump Crypto and Virtu Financial. Two years ago, Japan’s SBI acquired B2C2. Newer entrants include Alan Howard’s Elwood Technologies and Standard Chartered’s Zodia Markets, amongst others.
The range of institutional custodians is rapidly expanding. Fireblocks, Metaco and Copper provide technology services to many of them. Traditionally banks are major custodians, and BNY Mellon recently went live. But a combination of proposed Basel III rules for crypto custody and SEC accounting rules might hamper the rollout of crypto custody from bank custodians.