One in Four Trading Firms Have Adopted Crypto in Some Way

A report produced by derivatives analysis firm, Acuiti, has revealed a growing interest in listing crypto assets among institutions, despite lingering compliance concerns. The report was compiled in partnership with exchanges, Bitstamp, and the Chicago Mercantile Exchange (CME).

The study surveyed 86 “senior executives from the buy-side, sell-side, and proprietary trading groups specialized in traditional derivatives trading, clearing and execution.”

The report also supplemented its findings by surveying trading firms which specialize in cryptocurrencies.

26% of trading firms have adopted crypto assets in some form

The report found that 17% of traditional trading firms have already adopted crypto assets — with adoption defined as “trading or enabling the trading and clearing of at least one digital asset spot or derivatives instrument.”

Looking at all trade service providers, the study found that one-in-four respondents support crypto assets. In all markets surveyed, client demand for digital assets was found to far outstrip the willingness of trading firms to list cryptocurrencies.

Sell-side firms providing digital asset services are limited to supporting either CME or Bakkt's derivatives — with CME seeing twice the adoption of Bakkt.

Crypto assets are ‘on the cusp’ of significant mainstream adoption

The report found that 45% of the firms that do not currently support crypto assets are planning on revisiting the idea within the next 6 months.

Further, 97% of firms indicated a willingness to reconsider their decision within two years.

Asian digital asset adoption significantly outpaces North America

The study notes much higher rates of adoption from trading firms based in the Asia-Pacific regions — where adoption rates are 57%. North American firms were found to have the largest differential between demand and adoption — where only half of the demand for digital assets is met.

Will Mitting, the managing director of Acuiti, stated that the firm identified “a growing split between demand from traditional trading firms to broaden their coverage of digital assets and the willingness or ability of sell-side firms to provide access.”

The majority of firms that have adopted crypto did so within the last 12 months.

Institutions identify security and custody as major crypto risks

The survey asked all respondents to cite the three greatest risks that they associate with listing digital assets.

Across the board, general security concerns and fears of getting hacked were cited among the chief risks identified. Traditional trading firms also emphasized unease regarding the custody solutions available for storing crypto assets.

Both traditional firms and crypto exchanges identify market-making opportunities

The report found that market-making was the common strategy employed by both crypto asset exchanges and traditional trading firms.

Unlike institutions, crypto exchanges were found to also devote significant resources into over-the-counter trading.