Digital asset exchange, Bitfinex, and digital asset custody provider, Koine, have launched an institutionally oriented post-trade service, enabling investors to mitigate counterparty risk and the use of private keys in the clearing and settlement of cryptocurrencies.
Koine customers gain access to a post-trade solution from a business licensed by the UK’s Financial Conduct Authority, a service specifically designed for institutional investors to mitigate counterparty, insolvency and credit risks of trading on exchanges. Koine customers who also have an account on Bitfinex will be able to obtain a line of credit on the Bitfinex trading platform using bitcoin or other cryptocurrencies held with Koine. The Koine service, which provides settlement and segregated custody services for digital assets along with digital assets to fiat, provides a near real-time solution that it says obviates manual post-trade processes.
Bitfinex says the collaboration with Koine delivers a trading environment that meets the needs of institutional investors, providing fund managers with a separate custody solution while maintaining continuous ownership throughout the trade lifecycle. By delivering cross-venue operability, and real-time settlement, with cleared funds, algorithmic traders can dramatically increase capital efficiency leading to a huge growth in trading volumes, it adds.
Koine’s security model, which deploys “digital airlocks”, replaces the cold storage and hot wallet model that it says can compromise the security of private keys as a result of still needing to be “eye-balled” by staff. By combining this new digital asset security model with fiat custody and DvP settlement, Koine provides a post-trade solution that is suitable for traditional capital markets, it claims.
“Collaborating with Bitfinex to help bring new funds into their trading environment is an extremely important step in our evolution,” says Hugh Hughes, chairman and CEO at Koine. “It is leading exchanges like these that will benefit from the shift to a more traditional market structure that will quickly lead to institutional capital participation and the rapid growth of trading from algorithmic funds.”
“We have always focused on building a service fit for institutional trading,” said Paolo Ardoino, CTO at Bitfinex. “In this collaboration with Koine for the delivery of custody post-trade infrastructure, we make another step on the path towards massive institutional participation in the crypto-trading market.”