Darius estimates that “80 to 90 percent of the crypto liquidity is in the OTC market and not on exchanges.” OTC trading is attractive as it allows for more efficient counterparty discovery and seamless negotiation and settlement. Instead of going to multiple exchanges and incurring fees, OTC traders enjoy broader networks and economies of scale.

OTC trading desks are essential for liquidity in the market, said Maxime, who previously worked as a foreign exchange trader at BNP Paribas. “If you look at the crypto market right now, it’s so fragmented,” he continued. “If you wanted to move $50 million Bitcoin, you would probably have to go to 10 to 20 exchanges to get the best price. The OTC desk has the proper infrastructure to be able to connect you and provide you with the best price on every one of your orders.” Decentralized exchanges are particularly attractive to trading desks as they offer more security and control and access to a global marketplace.

Given its location in Asia, QCP is attuned to the impact of the region’s capital controls (governmental policy limiting money that moves in and out of a country) on the crypto market. Capital controls create inefficient monetary mobility, said Darius, “and crypto plays a huge role in disrupting this inefficiency.” Restrictive capital controls appear to have led to the popularity of stablecoins, digital assets backed by a fiat currency, in the region. Darius pointed out that stablecoin Tether (USDT) currently makes up nearly 70% of QCP’s trading volume, adding, “the amount of USDT that moves through China, Hong Kong, and the rest of Southeast Asia is massive. It’s a crypto layer forming across the traditional economy and something that cannot be ignored.”

Security Tokens and Secondary Trading

Another topic being widely discussed in the crypto space today is the role of the security token, or digital security. To provide context on the impact of digital securities Rob welcomed AirSwap’s in-house counsel Khurram Dara and Jorge Serna, VP of product at Securitize, a compliance platform for digitizing securities on the blockchain.

Securitize is a white-label platform that provides all of the lifecycle support to securitize assets compliantly — from supporting issuers in raising money, to running all of the checks for the investor, including KYC/AML compliance — using Ethereum as the baseline for its technology. As such, its compliance verification relies on smart contracts and is programmable. “The model for digital securities isn’t trustless,” explains Jorge, “it’s requiring trust in the issuer.” After Securitize verifies parties through its protocol, it adds them to a whitelist that it shares with Ethereum. Recently through AirSwap, a test of the first peer-to-peer security token transfer was completed on a public blockchain with Securitize’s DS protocol.