The drop in crypto markets earlier in 2022 may have alarmed some operators in the space, but others are taking this time to build on their offering and set their business up for the next wave of investment in digital assets.
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The drop in crypto markets earlier in 2022 may have alarmed some operators in the space, but others are taking this time to build on their offering and set their business up for the next wave of investment in digital assets.
“When the market was dropping, over the last six months or so, we’ve been in a position of strength,” states Omid Zadeh, head of business development EMEA, Matrixport, “We’re seeking to grow in a contracting market.”
This means the firm is hiring additional experts, optimising existing products and building out new product lines and businesses. “We are getting ready for the next wave of institutional clientele looking to come into the digital asset ecosystem and allocate large institutional capital into the space,” Zadeh says.
Matrixport is going into a bear market from a position of strength, both in terms of business and operations. This is due, in large part, to the broad base of the company’s offering. The firm’s wide range of services supports key functions across the digital assets ecosystem and therefore areas which may have suffered in the last few months were buoyed by other services which continue to see demand.
Zadeh also adds: “Our wide spectrum of clients also means we are able to draw experiences from the different types of clients and create products fit for each group, in various markets.”
The firm has already put this plan to further develop its strengths into action, building on its Asian foundations by growing a strong US presence and working to expand its European reach. As part of its US development, Matrixport recently appointed a new CEO for its US operations – Anthony DeMartino, who joined in June 2022. Prior to taking on this role, DeMartino was at Coinbase where he held several roles including head of risk strategies, institutional DeFi and derivatives trading.
In addition to its expansion plans, Matrixport will continue tending to its large lending and borrowing business as well as its custody offering. The firm has a ventures arm to forge strategic collaborations with early stage Web3 innovators, helping them build, grow and scale.
Prime services
Another key building block in the firm’s strategy going forward is the strengthening of its provision of prime services for centralised and decentralised exchanges. This is key in light of the greater number of traditional hedge funds, financial institutions and institutional investors coming into the crypto market.
“These types of clients are most concerned about counterparty risk. They focus on ascertaining who you are as a business. They want the details on your due diligence practices and security levels. We believe that because of our large balance sheets, and the team’s experience with the crypto market cycles, we are able to represent very strong credit risk and counterparty risk to those institutional clients,” notes Zadeh.
Matrixport actively manages $4B in digital assets and does not lend out on an uncollateralised basis. It also does not have a proprietary trading desk which may provide institutional clients added peace of mind. Further, the firm has strong risk management frameworks, which are fully automated and actively supervised across its prime business. Zadeh says: “Coupling all those factors with a strong balance sheet means we represent excellent credit risk for institutions coming into the market and are looking for prime services.”
Transparency and compliance
With a focus on risk management and due diligence, we’ve designed it such that the customer crypto journey with Matrixport is carried out in a very safe and measured manner. Zadeh outlines: “We manage risk, security and operations in a much clearer way than what’s been done in the marketplace. The main challenge for crypto natives going forward is for them to access capital and to optimise that capital. They are also facing certain levels of exchange risk. Therefore, they’re keen to do as much due diligence on their prime broker as possible.”
This call for transparency and greater information sharing has played into Matrixport’s strengths as the firm aims to offer asset managers greater transparency regarding where their funds are held and whether they are being lent out in a fully collateralised way. “It’s about creating assurances and making clients feel safe,” Zadeh stresses.
In its journey forward, Matrixport considers compliance to be a key advantage. The firm is focused on its international growth strategy with a regulatory roadmap to secure licences in North America and other parts of the world.
“We are working with regulated large, traditional hedge funds to onboard them in a manner that is completely understandable to them. This means working with their legal and compliance departments to create a framework which will allow them to be clearly onboarded in the safest and most compliant way,” Zadeh underlines.
In its growth trajectory, Matrixport aims to keep on listening to clients and build products to meet their demands and requirements. Zadeh states: “Our focus is on the continued innovation of our Wall Street solutions to gear up for the next wave or digital assets adoption.”
