As the cryptocurrency market continues to grow in popularity among institutional and retail investors, it is important to be able to meet the growing needs of market participants with the right technology, controls, and processes. In our experience as a market operator and a critical technology partner for over 130 market infrastructure organizations worldwide, institutionalization is the key to investor stability and longevity. There are two areas that cryptocurrency exchanges need to work on in order to achieve institutionalization. It is about having a reliable, transparent and scalable market infrastructure, as well as market surveillance mechanisms that ensure the fair and full functioning of exchanges.
Reliable, transparent and scalable market infrastructure
The cryptocurrency market is almost always active, working 24 hours a day, 7 days a week, 365 days a year. Persistent market access coupled with volatile market conditions can threaten an exchange’s core business if the technology is not designed and built to be flexible and scalable. It is critical to use business technology designed for high order volumes with redundant and scalable infrastructure.
Several cryptocurrency exchanges use Nasdaq technology to meet the needs of retail market participants and markets designed to offer a high yield, low latency institutional trading model as well as new asset offerings. You benefit from the flexibility to introduce classes and models. XP Inc. recently announced the creation of XTAGE, a cryptocurrency trading platform. This demonstrates that, through a technology partnership with Nasdaq, XP operates with a robust and innovative capital markets infrastructure with the ability to seamlessly add new assets.
In addition to its activities as a technology partner, Nasdaq has announced new ventures to strengthen its digital asset ecosystem. The launch will facilitate and promote greater institutional participation in digital assets by providing robust institutional grade solutions focused on better custody, liquidity and integrity. We Support Our Commitment As more and more crypto exchanges choose to use the medium, partnering with an experienced technology provider that advances crypto strategies is critical to success.
Infrastructure is essential to create a robust and scalable marketplace, but digital asset exchanges must also consider external factors. One of them is regulation. As regulation evolves globally, cryptocurrencies and digital assets remain the focus of regulatory and governing bodies.
As regulators around the world increase their focus in this area, cryptocurrency exchanges can implement proven capital market practices to ensure fair and secure markets for all participants. To combat the growing threat of financial crime in digital asset-related financial assets, Nasdaq has expanded its financial crime technology to include the capabilities and reach of the crypto ecosystem. With Verafin and Surveillance, Nasdaq reduces risk, monitors anti-money laundering, detects fraud and market abuse in traditional and digital assets, fiat and crypto assets. . – Chain activity. With the right technology in place to fight financial crime, the crypto market can provide a safer place to trade for individual and institutional clients and encourage greater participation.
As the digital asset landscape continues to evolve and new regulations are introduced, exchanges must have the right technology and processes in place to remain competitive, balancing a flexible infrastructure with the right monitoring protocols is key to success.