Over half of buy-side firms claim using a “traditional” and “recognised” custodian would make them more likely to trade digital assets, new research by SIX has concluded.
Alongside a reliable custodian, regulated exchanges also appear to be a priceless piece in the crypto puzzle for buy-side traders.
Around 60% of the 300 individuals across the buy-side surveyed by SIX pointed towards a desire for a safer trading environment, with many of them suggesting this should come in the form of a regulated exchange to provide better transparency.
“For the industry to get where it wants to be, more focus should be turned to the availability of regulated marketplaces and the liquidity of the digital tokens traded on them,” said David Newns, head of SDX [SIX Digital Exchange] at SIX Group.
“After all, it is not a lack of confidence in the assets themselves that is supressing institutional engagement with this market – it is the need for institutional platforms offering robust governance and sound regulatory oversight.”
While only 11% of those surveyed by SIX currently hold digital tokens in their portfolio, 69% said they plan to add them in the next 12 months.
“Investors need the same levels of protection and market resilience in digital assets as they experience in more traditional markets,” said Javier Hernani, head of securities services at SIX Group.
“The market for digital assets needs to be fully brought into the institutional financial system in order to manage the risks and standards to improve security and provide more confidence to its participants.”
Read more – Traders peg UAE and EU as optimal regulatory environments for crypto trading
Around 90% of traders surveyed in a recent Acuiti study said trading venues should hold principal responsibility for monitoring and reporting market abuse in the digital assets market. While 83% said they believed that trading venues should hold the same responsibility for trade and transaction reporting.
Digital assets regulation and infrastructure is continuing to build out globally. The EU and UK are taking divergent approaches to regulation with the former opting for a phased secondary legislation approach and the latter opting for a “big bang” with the MiCA regulation proposal.
The EU’s Markets in Cryptoassets Regulation (MiCA) is entering into law this summer and will come into effect next June.