NextPrime, a provider of operational and capital efficiency to institutional participants in digital asset markets, has partnered with Asia-Pacific financial services group Crown Financial Services (CFS) to bring service banking, custodianship and multi-currency clearing and settlement solutions to the digital asset ecosystem worldwide.
CFS, a provider of money remittance, payment gateway, portfolio management, lending and investment services, already serves a number of exchanges. CFS will serve as a secure custody bank to NextPrime and aim to enable financial institutions and wholesale professional traders to easily trade digital assets at lower costs and less risk.
“Trading digital assets is the future but the market structure to do that today is slow, inefficient and archaic,” says Jeff Bone, Head of Product and a Managing Partner at NextPrime. “Professional traders and institutions have huge costs, operational risk and capital inefficiencies because collateral is fragmented across many exchanges. Systematic relationships between custodians, service banking, and market participants are limited. For the market to mature this must be addressed.”
A professional trader needing USD10 million in buying power on ten exchanges might be required to post up to USD100 million in aggregate collateral, wait days for fiat transfers to settle and incur risk and expenses in stablecoin purchases or redemptions to simple even re-balance their buying power after a day’s trading. Exchanges must manage large customer flat deposits and crypto collateral along with on/off-ramp transaction for both. This raises compliance costs, limits exchanges’ banking options, increasing risks and reduces overall liquid capital availability. All this can lead to exchanges spending more on compliance and regulation than on improving their markets and innovation for their customers.
“Our partnership with CFS allows us to solve the problem of custody, which is a critical piece of the puzzle in allowing institutions and investors to securely trade digital assets and cryptocurrencies at volume as efficiently as any other asset class on the market today,” says Bone.
“This partnership is consistent with our strategy of expanding our services to industries and companies that are not adequately served by the financial markets in a fully transparent and regulated manner,” says Marvin Yee, Managing Partner at CFS. “We believe that the trading of digital assets as part of a diversified portfolio will present significant wealth opportunities to our clients throughout the region. It is our intention to be a ‘first mover’ and a foundational part of this ecosystem.”
“If crypto has any chance of becoming a serious asset class, it needs to mature in the right way in order to become a first class citizen of the financial world,” says Bone. “It’s high time that the true potential of crypto be unleashed and benefit the many and not just the few players who are profiting from a fragmented and inefficient environment that keeps crypto anaemic relative to its actual capabilities. We see this partnership as a step in the right direction towards creating a profitable digital asset trading future for all.”
