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Why are brokers needed in the field of digital assets?

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Why are brokers needed in the field of digital assets?

September 17
03:36 2019

Brokers are the natural result of the development of traditional financial industry. The evolution of the field of digital assets follows the same rule as emerging financial market in 2019.Traditional financial brokers have started to enter the field of digital assets trading while emerging FinTech enterprises have joined the game too.

Fidelity Investment, the world’s largest asset management enterprise, will launch Bitcoin trading services to institutional clients. The service was jointly developed by Fidelity and securities brokerage enterprise eTrade, Robinhood. eTrade is a well-known Internet broker in the United States, with more than 5 million clients.

TDAmeritrade, the second largest Internet broker in the United States also provides Bitcoin Futures trading service for professional institutions or clients. 

Earlier this year, American cryptocurrency broker, Tagomi, obtained its second round of financing worth 12 million US dollars. European blockchain financial service provider Blockey finance has also started to offer digital assets brokerage services to its institutional clients in Europe.    

Traditional financial trading is consists of opening an account, making transactions, registering, settling, and so on. Under the context of traditional financial industry which exists within a relatively well-established structure, designated services are often provided for each part of the trading. However, in the field of digital assets, services are provided by the same organizations for each part of the trading when compared to the traditional financial industry, namely Exchanges, which, have relatively large drawbacks. 

At the early stage of the field of digital assets, simple industrial structures help drive the rapid development of the field because of small trading volume and less professional demand for various services. However, tens of thousands of Exchanges have been established throughout the world and such phenomena inevitably engenders fierce competition. The increasing amount of clients and demand have resulted in higher requirements on services, and Exchanges in turn have to add more investment and liquidity to develop and enhance their overall system performance and operational capabilities. Exchanges need to upgrade each link of their services to step up their game. But the concentration and irrational allocation of resources and liquidity could hinder the development of the industry.

The total value of digital assets throughout the world has reached about three hundred billion US dollars after ten years of development. If each link of trading were concentrated across Exchanges, in the case that one of the trading links broke, it would impede the functionality of all other links and the overall stability of the industry, causing great risks.   

Ergo brokers are called for in such situations; when the scale of digital assets has reached a certain volume to mitigate the risks in the industry and optimize the allocation of resources.

Apart from that, digital assets trading essentially belongs to the financial industry. However, engaging in financial industry could cause a certain level of difficulty to common users, and therefor brokers are needed to serve and guide  users. Besides, using professional brokerage services provided by brokers helps to reduce the threshold of common users and in turn attract new flow to join the industry fast.

Several trends have appeared during the recent development of digital assets Exchanges in recent years:

Mainstream countries have strengthened the supervision on digital currency Exchanges, and the development of the industry have tended to meet regulatory standards.

The upsurge in the number of Exchanges has resulted in the revision of pricing models on digital assets.

The diversity of digital asset prices and the differentiation of multiple standards have called for a trend of using professional trading services. More and more institutional clients and investors need to rely on greater professional trading technologies and brokerage services to get a head start.

Exchanges tend to form alliances and turn into brokers

The world’s leading exchanges world, like Binance, Huobi, OKEX, started to embrace the trend and carried out an open alliance plan. The plan is to develop brokers to business (clients) resources via profit-sharing schemes. Independent brokers and broker groups are emerging, and they are different from the system based on digital asset exchanges, creating projects such as wallets, markets and professional tools. Flows from non-Exchanges are seeking opportunities to transform too.

Weakened authorities within centralized Exchanges  

Multi-level dividends and multi-layer structures have appeared in the field of digital assets, with many more industrial alliances, rating agencies, due diligence agencies, leading investment institutions, and news media to come. Served as market participants that assist to price projects and supervise the market, digital assets Exchanges are gradually returning to the essence of trading functions. 

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Company Name: Blockey Finance
Contact Person: Media Relations
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Country: United Kingdom
Website: www.blockeyworld.com