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How To Manage Crypto Counterparties - Without The Risk!

After the first enormous wave of Crypto trading when prices skyrocketed, many retail brokers felt the pressure to offer this new, exciting and hyped up asset class to their clients.

As Crypto kept growing, we saw a mass of brokers B-booking the entirety of their crypto trades. Back then it was extremely difficult to get reliable liquidity as the original Crypto exchanges were unregulated and, quite frankly, didn’t make trading particularly easy. A few years ago, as I’m sure many of you can remember if you had any issues regarding pricing or a position and needed to get hold of someone – “good luck” is all I would say! This partnered with the cancelling of trades whenever liquidity providers desired, without any seemingly valid reason, left a sour taste in a lot of people’s mouths.

Other than this, B-booking trades was all well and good if the clients kept pumping more and more money into crypto assets. But this Crypto fairy tale sadly didn’t last long...

Fast forward to 2018, Bitcoin prices plummeted, dropping by 65% after a ginormous sell-off of cryptocurrencies. And what did this mean for brokers? They completely crashed and burned. Clients ended up owing up to tens of thousands of dollars and put brokers completely out of pocket. This left them no other option but to withdraw from crypto, which nearly all of them did, shell-shocked and moneyless.


But it’s not all doom and gloom!


So, how can you offer cryptocurrencies in a risk-managed way?

Since the Crypto crash a few years ago, the liquidity provision for Cryptos and the number of professional institutional-grade exchanges has improved dramatically, making it much easier to find reliable Crypto liquidity and allowing brokers to properly manage and offset all of the risks. What does this mean? Well, at present, it doesn’t really matter what happens to the prices of Crypto as whether they go up or go down, brokers can have peace of mind knowing that their risk is covered and they are protected and can focus themselves fully on serving their clients best.

Not only this, but innovative technology systems such as Gold-i’s Crypto Switch™ have entered the market, aggregating many professional liquidity providers and giving brokers access to diverse and deep pools of liquidity across a whole bunch of reliable providers.

Crypto Switch™ not only offers central clearing and settlement methods but also allows for tighter spreads and full depth of market. With such a solution you can benefit from full control over pricing and execution with a choice of primary/secondary feeds or full aggregation!

If you are a broker, Crypto Exchange, Investment / Asset Firm or manager, optimise your liquidity opportunities, or distribute your own with Gold-i Crypto Switch™

Become Crypto competitive.

Contact us today to find out more.

About the author

Tom Higgins

Tom Higgins

Tom Higgins is the Founder and CEO of Gold-i with experience in financial technology spanning over 25 years. With an in-depth knowledge of the trading technology industry, Tom set up Gold-i in 2008 after spotting a gap in the market to enhance the FX trading process for retail brokers. As the inspiration and driving force behind Gold-i, Tom has played a major role in disrupting the retail FX and Crypto market, giving opportunities to brokers/exchanges across the globe. Now extending the firm’s focus to the institutional market, he uses his market insight to continue to drive innovation.