Nickel Digital Asset Management, the London-based digital assets hedge fund manager founded by Bankers Trust, Goldman Sachs and JPMorgan alumni, is calling for more crypto exchanges to integrate with Off Exchange Settlement solutions, which it says will dramatically reduce counterparty risk, protecting investor capital against FTX-like events.Â
Nickel Digital Asset Management (Nickel), the London-based digital assets hedge fund manager founded by Bankers Trust, Goldman Sachs and JPMorgan alumni, is calling for more crypto exchanges to integrate with Off Exchange Settlement (OES) solutions, which it says will dramatically reduce counterparty risk, protecting investor capital against FTX-like events.
New analysis by Nickel reveals that of the 20 largest crypto exchanges, seven entities representing 63% of daily trading volume, have integrated with an OES solution. The eighth exchange is in the process of integration, which once completed, will boost the share of overall daily trading volume happening on OES-compliant exchanges to nearly 70%.
Another 11% are processed by well-established exchanges, such as Coinbase, Kraken and Bitstamp, which have not integrated with OES but are regulated in the US and Europe.
Nickel’s analysis reveals that of the four latest exchanges to have OES, the integration was either triggered or sped up by the FTX debacle.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, says: “We believe OES is the best path forward to mitigate counterparty risks in the crypto ecosystem, eliminating the need for investors to keep their capital at trading venues. The off-exchange-settlement allows for a structural change of counterparty risk models in the digital asset space, adopting the best practices from traditional finance while enhancing them with the crypto-native tools, such as real time on-chain visibility and 24/7 trading pattern, thus paving the way for increased participation of institutional capital.”
