Cyberx, a Hong Kong-based crypto prime brokerage, launched on Wednesday the world’s first cross-exchange portfolio margin service for spots and derivatives trading.
Why it matters: Prime brokerage for cryptocurrencies is still a nascent industry, with only a handful companies around the world offering such services. Most crypto-focused prime brokerages are headquartered in and focused on the US, away from the crypto liquidity of Chinese miners.
- The new offering promises to significantly ease much of the headache around trading crypto across hundreds of platforms.
Details: Cyberx’s new product, “Prime,” will unify portfolio margins across exchanges for derivatives, according to its press release.
- “We are targeting mining pools, wallets, and quant hedge funds,” the company’s CEO and founder Wang Hao told TechNode.
- The focus on quantitative strategies and derivatives is better suited to the Asian and Chinese market, the CEO said.
- Crypto investors in “the rest of the world, especially in the US, want to do buy and hold” strategies, “they are not really doing quant strategies and turnover is not that high,” Hao said.
- On the other hand, crypto investors in China, and Asia more generally, are “doing more on quant trading and market neutral trading,” for spots and derivatives. One reason why Chinese investors are more focused on derivatives trading is that they are less regulated in China, Hao said.
- China has a lot of crypto investors with a lot of liquidity and “most of the institutions are managing their own capital to trade,” mainly from miners and early crypto adopters, Hao said.
- “We are not only targeting China, but we know Chinese institutions well,” he said, adding that their expertise in traditional finance helps them gain clients’ trust.
- Hao also wants to attract hedge funds from traditional finance into crypto investing, so Cyberx is trying to make trading easier for non-crypto investors by unifying API gateways with their new product. “We have a lot of friends from the traditional finance world. They don’t really know how to gain their first bitcoin and they don’t have their own historical market data,” Hao said.
- “There are a lot of [traditional] hedge funds in Asia, in Hong Kong and Singapore, that are really interested in crypto markets,” the Cyberx CEO said.
Context: Founded in 2016 by former Goldman Sachs executive Wang Hao, Cyberx offered trading services in traditional finance until 2018, when it switched to crypto.
- It is headquartered in Hong Kong and has offices in Beijing and San Francisco.
- Cyberx has been working with 50 institutional investors globally, its press release said. These include mining pools with a big presence in China such as F2Pool and Poolin, Chinese crypto wallets Bixin and Cobo, crypto lender Babel Finance, quantitative hedge funds with investments in traditional finance like Kronos Research, and exchanges, the CEO said.
- The crypto prime brokerage industry has been heating up in the last year, with heavyweights like Digital Currency Group and Coinbase acquiring prime brokerage startups.