A crypto prime brokerage based in Hong Kong, Cyberx launched the first cross-exchange portfolio margin service in the world on Wednesday for derivatives and spots trading. Prime brokerage for crypto remains a rather nascent industry for now because there are only a few companies that are offering such services globally. Most of the prime brokerages focused on crypto have their headquarters located in and around the United States, which means that they are away from the crypto liquidity that’s associated with Chinese miners. The new offering promises to eliminate the headache associated with trading cryptocurrency across hundreds of platforms.
Given the name ‘Prime’, according to a press release, the new product by Cyberx will help in unifying portfolio margins across different exchanges where derivatives are concerned. Founder and CEO of the company, Wang Hao said that their target was wallets, mining pools, and quant hedge funds. He said that the Chinese and Asian markets were more appropriate for focusing on derivatives and quantitative strategies. The CEO went on to say that most of the crypto investors in other parts of the world, particularly the United States, are more interested in ‘buy and hold’ strategies.
As they are not really interested in quant strategies, it doesn’t really give a high turnover. In contrast, crypto investors found in Asia and China tend to focus on market neutral trading and quant trading, when it comes to derivatives and spots. Hao also stated that a prominent reason that Chinese investors were interested in derivatives trading was because of less regulation in the country. He noted that there are a lot of crypto investors in China who have high liquidity and early crypto adopters and miners are helping institutions in managing their own capital for trading. Hao said that while China was not their only target, they have a proper understanding of Chinese institutions.
He added that the brokerage’s own expertise in traditional finance was handy in helping them gain clients. He was also keen on attracting hedge funds in the traditional finance space towards crypto investing. Therefore, the brokerage is making it easier for non-crypto investors with their new product that unifies API gateways. The CEO said that they know a lot of people from the traditional finance world, but they don’t know how to get their first Bitcoin and they don’t have their own historical data either. The Cyber X CEO said that there were a lot of traditional hedge funds in Singapore, Hong Kong, and Asia, who are interested in the crypto markets.
Until 2018, Cyberx had also been offering traditional financial services, but then it decided to make the switch to crypto. It has been working with more than 50 institutional investors globally and these include Chinese crypto wallets like Cobo and Bixin, quantitative hedge funds like Kronos Research that have investments in traditional finance, mining pools with a big presence in China like Poolin and F2Pool, and crypto lender Babel Finance. In the last year, the crypto prime industry has seen some growth with heavyweights like Coinbase acquiring startups.