This was revealed in a recent report collated by the Binance Broker and Binance Research teams. According to the report, traditional brokers have wholly failed to keep up with the rate at which the needs of financial participants change.
The report reads in part as follows:
“Due to regulatory restrictions, traditional brokers have not opened up spot crypto services (only derivatives and other instruments). As a result, crypto exchanges have established themselves as the center of the emerging crypto brokerage industry.
“Consequently, large crypto exchanges have launched prime brokerage services to provide institutional investors with custody, block trading, aggregation trading, and other services.”
According to Binance in the report, over several decades, prime brokers have been serving as one-stop-shop of financial services for large players in the industry. They have been providing various offerings such as trading, custody, cash management, stock buybacks, and others.
The report states further:
“Some crypto exchanges, wallets, and trading terminals have begun prime brokerage businesses. For instance, Coinbase offers prime brokerage starting from custody, whereas Huobi and Bequant offer prime brokerage with [over-the-counter] block trading….
“Crypto broker service providers have empowered brokers to offer services to institutional participants from both crypto and traditional brokerage environments, promoting the lateral expansion of the industry through non-crypto companies offering dedicated crypto trading to their users, which is expected to further lower entry barriers in the industry.”
Concerning the future of the crypto brokerage industry, the top exchange showcases its belief in traditional brokers offering crypto services as regulatory requirements are made easy:
“As the crypto industry continues to develop, the gap between the conventional financial market and the crypto market will continue to narrow. With a growing base of retail and institutional users, an expanding market, and the emergence of increasingly specialized functions, a virtuous cycle of growth started.”
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