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Traditional financial institutions are becoming increasingly active in the crypto space. Recently, there are reports that a globally systemically important bank is preparing to launch a cryptocurrency prime brokerage business, planning to operate through its venture capital division to provide comprehensive services such as custody, financing, and trading access for market participants. This plan is still in the early development stage.
The considerations behind this are quite practical—through this structure, the bank can effectively avoid the current regulatory framework's requirement of up to 1250% capital reserve for unlicensed crypto assets. Interestingly, this bank has already made moves in the crypto ecosystem, having previously participated in digital custody and trading platform projects. According to their plan, they aim to become the first globally systemically important bank to launch spot crypto trading services by 2025.
The entry of traditional financial institutions signifies that the infrastructure and formal deployment in the crypto market are accelerating. This will promote the overall maturity of the ecosystem and enhance risk management levels.