Independent Reserve, the Australian Digital Currency exchange, has opened Australia’s first over-the-counter trading desk for institutions wanting to make large digital currency trades.
CEO Adrian Przelozny said the lack of block trading venues had been a barrier for institutions to participate in digital currency investment.
“Digital currency markets are just like any other asset class, in that when the market sees a big trade coming through it will move the price against whoever is making that trade,” he said. “In equity markets they solve that problem with dark pools and sales trading desks, but there is no digital currency equivalent in Australia as yet. By establishing an OTC desk with sales traders we’re able to connect institutions with one another, so they can trade without moving the market or getting price slippage.”
Mr Przelozny said the union of orderbook and OTC was a leading trend in the global digital currency space, as evidenced by deals such as Goldman Sachs’ backed OTC broker Circle’s purchase last week of Poloniex for US$400M. “With our OTC offering we are creating the first institutional-grade offering for firms in Australia and New Zealand,” he said.
Trading professional Tobias Abbey will join Independent Reserve to lead the development of the OTC desk. “Tobias is a highly experienced trader with over a decade of experience in global physical and derivative financial markets, as well as being a leading figure in the Australian and Asian digital currency markets,” Mr Przelozny said. “We can’t think of anyone better than Tobias to launch this business and we are delighted he has agreed to join us.”
The Independent Reserve OTC desk opens for business on March 19. Mr Przelozny said the interest from institutions was already strong.
“We’ve expanded to include an OTC offering in direct response to demand from the local industry,” he said. “By building the kinds of facilities institutions are used to having in other asset classes, we’re ensuring that any firm that wants to get involved can do so with improved risk management.”
Steve Bellotti, CEO of Digital Currency Holdings which advises an institutional crypto and ICO Fund, said: “It’s fantastic to see Independent Reserve building out an institutional OTC capability in Australia. We see this service and offering as another exciting step for larger crypto investors and adding valuable liquidity to the overall market.”
Richard Galvin, the CEO of Digital Asset Fund, commented: “This is an excellent move by Adrian and the team at Independent Reserve and a great development for the regional digital asset marketplace. I commend them on getting someone of Tobias’ industry knowledge and experience to lead the effort and look forward to working with them.”
The Australian digital currency market has grown significantly in the past 18 months as the soaring price of Bitcoin encouraged retail investment. However institutional take-up in Australia had been slower than elsewhere, according to Mr Przelozny.
“Now we have better facilities for institutions, I think this will change rapidly,” he said. “I think participation from local institutions will soon match the much more active participation we see in digital currency markets overseas.”