The one-stop shop for institutional-grade trading is here and it just completed its beta phase, it also just underwent a successful ICO (a fact that is hard to boast these days) netting funding to the tune of $16 million.
The crypto space is flourishing amidst a predominantly bearish trend, with the market taking hits daily it is strange to be talking about so much institutional interest. The talk of such things has been echoing around the space for years and only now are we seeing some truly interesting moves; from fidelity’s custody solution to Bakkt’s upcoming cryptocurrency ecosystem, it seems like a trend that is bound to continue. the same way that Bakkt looks to bring the institutional security found in the traditional financial markets into the crypto space; Caspian looks to bring the wide array of crypto facilities to the institutional market.
One way in which the exchange achieves this is through their full stack cryptocurrency trading an risk management system, providing connectivity to over 30 exchanges - including Coinbase, Gemini, and Binance - in one intuitive platform.
Chepicap spoke to Caspian's managing director, Chris Jenkins who gave his take on the emergent platform, and the nascent cryptocurrency industry.
Q | What do you think interest’s institutional investors about crypto?
A | Crypto assets enjoy relatively low correlation to other asset classes like bonds and gold. In other words, they’re a great way to diversify a portfolio. Cryptocurrencies can also represent an investment in many different businesses. Owning Bitcoin, for example, can be a proxy for owning an ETF on the entire Bitcoin-Blockchain sector.
Cryptocurrencies can be extremely attractive to managers seeking returns that exceed anything traditional markets can offer. Getting started in this industry early means getting in at the bottom of a market that is still in high growth mode.
There’s also a demand from consumers that funds want to react to.
People have been waiting for the entry of institutional investors for years –and now it’s finally happening. As an asset, cryptocurrency needs support from the multi-trillion dollar institutional investment industry. Remember, just a few years ago, cryptocurrency was considered a pariah asset. Now the biggest institutions in the world are moving in. This is hugely symbolic. It also forces the hand of regulators somewhat. It will be very hard for them to stand on the sidelines and leave grey areas in legislation when Wall Street banks and the world’s most important funds are invested in cryptocurrency.
In this respect, the institutional investment will create a chain reaction that cements cryptocurrency’s position in our society and economy.
Q| Is Caspian available for non-institutional investors?
A| Caspian is designed with institutional investors in mind, however non-institutional investors can also get tremendous benefit from it too. If you’re investing a small amount of money in crypto, one exchange might work out fine for you. However, if you are trading across multiple markets investors will see huge opportunities to maximise returns with the Caspian platform.
Caspian provides a single interface into all major crypto exchanges, providing simultaneous access to the main crypto exchanges with one click in a single front-end product.
And let’s not forget that when the institutional funds do come in, the capital inflows will be enormous. This could have a huge impact on prices and volumes which should benefit all crypto traders – both non-institutional and institutional.
Q| Due to Caspian’s ability to connect to these different markets, is it likely that Caspian will make arbitrage trading more prevalent in crypto?
A| The equities market has taught us that big windows of opportunity can open in early markets. Arbitrage trading led to huge rewards in early equities markets. Similarly, there’s an awful lot of money to be made in leveraging price discrepancies across digital exchanges. The fact we support more than 30 exchanges (and counting) provides huge arbitrage opportunities. By tying the different platforms together in the same interface, we’ve made it much easier for customers to spot the opportunities that will present themselves over the next few years.
Q | How is the Caspian token (CSP) integrated into the platform?
A | The purchase of the CSP token (which is ERC-20 compliant and issued on the Ethereum blockchain) will enable participation in the Caspian platform. The CSP isn’t necessary to enjoy the base feature set of the platform – even without the token, clients can use all core features. But the CSP token will open access to unique benefits. Different users will be able to find value in the token in different ways.
The CSP token incentivises platform use and the development of unique third-party tools and features. It’s intended to create a rich, participatory ecosystem in which platform users become community members with a vested interest in the platform’s smooth running.
The CSP also rewards developers who offer their apps for free. We will incentivise development on the platform through grants, bounties, and a rewards engine – allowing the emergence of rich platform features that complement base features.
Q | How does the platform intend to counter slippage from inevitably large volume orders?
A| Most existing digital asset exchanges started life as small ventures which organically grew. That’s why so many of them can’t handle large order volumes. So they suffer from high latency. This adds to the risk of slippage and the undermining of investment strategy and execution.
Caspian is rolling a suite of algos to help counter this issue, including a smart order router. In addition, we are connecting to several major OTC trading desks to enable clients to efficiently access all possible liquidity venues.
Q| Do you see platforms such as Bakkt as competitors or potential allies?
A| We believe that the more effective trading crypto solutions out there, the better. There are limitless crypto trading opportunities, and a rising tide lifts all boats. So we see Bakkt as a friend and an ally. It’s a serious operator and a great addition to the world of crypto trading.
I see Bakkt as a great fit for more marginal crypto investors – those that buy and hold, and are less likely to venture into the world of trading platforms and exchanges. It’s a solid custodial solution for institutional investors. But I’d say we offer the complete institutional trading solution.
Q| What does the future hold for Caspian?
A| Generally speaking, we feel our future is bright. We’ve just enjoyed a successful ICO despite this being such a trying period for the industry as a whole.
We realise our future is utterly dependant on serving institutions. We need to grow our business by adding exchanges and significant new features so our clients can focus on managing their funds. By providing the infrastructure that institutions need to confidently enter the crypto world, we’re building a foundation for a much larger market. So the future for us is all about volume, scale, stability, and liquidity.
We also expect to forge partnerships with regulators across the world to help shape a functional, secure marketplace that incentivises innovation while protecting investors.