The Crypto Trading Report 2022 sheds light on the global landscape of trading execution venues for digital assets and aims to provide insights into the current trading rationales of institutional market participants in this space. It offers insights into where institutions trade digital assets and explores the factors underlying their choices, including the advantages and drawbacks of each of the various digital asset trading venues and execution alternatives.
For the report, the Alternative Investment Management Association (AIMA) partnered with PwC and Finery Markets to survey institutional investors engaged in digital assets to identify their preferred platform for trading and executing orders for digital assets.
The report starts out by outlining some basic concepts and the current landscape of execution venues for digital assets. After that it provides a deeper dive into the prevalent execution venue options, such as centralised and decentralised exchanges or over-the-counter (OTC) alternatives.
Having explored the intrinsic advantages of the various venues, the report analyses how professional practitioners choose venues. By comparing the characteristics of the venue, the institutional actors and their choice, the report will highlight the actors’ deliberations and priorities.
The survey conducted by Finery Markets and AIMA recorded the market behaviour of 77 institutional market participants.
Eight key takeaways
Jurisdictions promoting the digital asset landscape and refraining from restrictive regulation lead the way in terms of the number of licensed institutional investors in this survey. This could indicate the potential of these jurisdictions to become hubs for digital assets. Furthermore, it could secure these countries an important position as international regulation is developed. Among the leading countries within the scope of the survey are Switzerland and various common law jurisdictions.
2. Company type
Over 50% of the companies that have traditionally traded in financial instruments are now engaging in trade in the digital asset landscape. According to the findings of this study, the range of institutional financial actors entering the digital asset market is diverse and could indicate broad adoption in the finance sector.
More than half of the respondents to this study held a licence from the supervisory organisation in their country of domicile. This not only points to regulatory supervision, but also shows that the authorities have prepared for the digital asset market to expand in the future.
4. Starting point
A similar number of respondents entered the digital asset market in 2021 compared to the total of the previous three years. This marks an increase in the number of institutional actors entering the digital asset market. Given that 2021 was a bullish year, a positive correlation between a bullish market and the number of actors entering the digital asset market could be established.
5. Monthly trading volume
Similar to the number of investors entering the digital asset landscape, the highest number of respondents say the monthly volume of digital assets they trade is less than USD 10 million. However, the total monthly volume traded above USD 10 million is greater than the total volume traded below USD 10 million. Therefore, while most respondents trade less than USD 10 million each month, the respondents trading more than USD 10 million make up a larger total of the monthly volume traded.
6. Number of trading venues
The number of digital asset execution venues used by the institutional investors featured in this study varies widely. Most investors use more than one venue, and about one quarter of respondents said they used more than 10 venues. Whether dominant market venues will emerge or the fragmentation will continue remains to be seen. A similarity can be drawn to the foreign exchange markets, where the market eventually moved towards consolidation.
7. Most popular centralised exchanges
According to the results of this survey, Binance was the most popular centralised exchange. To find out why centralised exchanges enjoy such popularity,= please see Chapter 4 of this report.
8. Most popular OTC desks
According to this survey the most popular OTC desk was B2C2. However, the survey showed that there was only a small difference in popularity between the OTC desks below B2C2 in the rankings.