CoinCheck hasn’t had the best time in the so-called “crypto winter.” The Japanese exchange was hacked for $530 million worth of XEM last year, and subsequently shuttered its services as everyone and everybody in the industry expressed their distaste.
However, with a change in management accomplished through a pricey acquisition by Monex Group, the trading platform has begun a newfound push to return to Japan’s cryptocurrency economy with a fresh, new face. And starting off this move to revitalize its reputation is the establishment of an over-the-counter (OTC) trading service aimed at institutional players.
CoinCheck Launches Institutional-Focused Crypto Desk
CoinCheck will be launching a “large-scale” OTC trading service in the near future, according to a recent press release. While the details conveyed were scant, with the firm providing no details about fees, the firm did divulge a little bit about this service.
The desk will purportedly only initially trade Bitcoin at “attractive prices,” before CoinCheck looks into expanding into other digital assets if there is sufficient demand. It is clear that CoinCheck intends for this offering to be heavily utilized by its institutional clients, as promotional images show transactions ranging from 50 BTC to 225 BTC — trade sizes whose value is in the hundreds of thousands.
While CoinCheck’s service may make only a little splash in the cryptocurrency pond, its decision to run with OTC cements that there is little-known yet abounding institutional interest in this asset class. Why else would the exchange have made this move?
And the Japanese startup is far from the first to have made a move into this sector. Early this year, BitGo, a Palo Alto-based industry heavyweight, revealed that it had partnered with Digital Currency Group’s Genesis Trading. This collaboration saw the companies announce an OTC desk, which would set an industry milestone due to its use of BitGo’s respected cold storage technology.
Genesis, headed by Michael Moro, formerly of SecondMarket (now a part of Nasdaq), will provide its expertise in facilitating large-sum, institutionally-sourced transactions, while the other partner will leverage its veteran status in the cryptocurrency custody ecosystem to ensure security.
Mere weeks later, Binance, the Malta-registered industry giant, revealed that it would allow users with “Level 2” KYC approval and above, most of which are high-ticket investors, to make OTC transactions with a value of more than 20 BTC.
More recently in February, Bithumb, South Korea’s largest crypto exchange, launched Ortus, a “block deal, matchmaking” offering that will act as an OTC liquidity aggregator. Clients of the venture will also have access to custodied fund transfers and global support staffers.
It is clear that some of this ecosystem’s biggest names are trying to capture whales in the ever-expanding cryptocurrency ecosystems. But will they see success? Maybe not yet, says Ledger’s Pascal Gauthier.
Speaking to me at Token2049, the president of the prominent French cryptocurrency security provider, explained that he is “100%” sure that custody is the primary facet of crypto holding back the so-called “institutional herd” right now.
He likens the current custody subindustry to the American gold rush, but with no banks, vaults, and safe makers. Gauthier rhetorically asked: “You can have a lot of crypto, but where do you put it?” Right now, the industry insider remarks, there are very few answers to this question.
His conjecture makes sense. Why would an institution that often trades in the million-dollar range throw their money into an insecure environment, even if there are adequate OTC services?
The recent launch of Fidelity’s custodial offering, which effectively legitimizes Bitcoin and the broader asset class, coupled with similar ventures, however, could be the red carpet that institutional players are waiting for to finally foray into this space.