Wall Street firms will take on Binance, Coinbase and other crypto-native exchanges

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An anonymous reader quotes a report from CryptoSlate: Traditional financial firms, including Standard Chartered, Nomura and Charles Schwab, are busy building or funding new crypto exchange and custody platforms, FT reported on May 31. These well-known Wall Street firms are betting that fund managers are still interested in trading crypto, even after last year’s market downturn and series of crypto scandals. The bankruptcy of FTX and the implosion of the Terra ecosystem, among others, have highlighted the risk of investing through largely unregulated exchanges. But traditional firms believe that asset managers prefer dealing with established players rather than crypto-native exchanges like Binance.

Gautam Chhugani, senior analyst for global digital assets at Bernstein, told FT: “Large, traditional and long-standing institutional investors definitely prefer to deal with counterparties that they know have been around for years and have been regulated in the traditional sense. .” In a survey of 250 asset managers published by EY-Parthenon earlier this month, half of respondents said they would consider switching from a crypto-native group to a traditional firm if they offered the same services. Additionally, 90% of respondents trusted traditional financial groups to act as custodians of their crypto assets.

The collapse of crypto firms last year and revelations about alleged wrongdoing have eroded crypto investor confidence. Traditional financial companies rely on their expertise in the financial sector, their long-standing reputation and the lack of regulatory control to attract customers. The new wave of legacy crypto platforms will compete with Coinbase and Binance, which also host institutional clients. But traditional financial firms will compete by implementing more transparent operations, in particular by separating exchanges from the custody of assets to avoid conflicts of interest and reduce risk. The report notes that BNY Mellon and Fidelity already operate separate crypto custody divisions. Meanwhile, the Nasdaq is waiting for regulators to give its service the go-ahead.

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