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Nickel Digital says 63% of crypto trading volume is via OES

Nickel Digital says 63% of crypto trading volume is via OES

  • Nickel Digital is advocating for increased integration of off-exchange settlements in crypto, noting that OES solutions can dramatically reduce fraud and bankruptcy risks
  • Analysis shows 63% of crypto daily trading volume is currently on 7 of the largest crypto exchanges that integrate OES solutions.
  • The FTX implosion catalysed further integration of the solution as platforms sought to reduce counterparty risk.

Nickel Digital Asset Management, a London-based investment manager authorised by the Financial Conduct Authority (FCA) and registered with US Commodity Futures Trading Commission (CFTC), says cryptocurrency exchanges can do more in the effort to reduce fraud and counterparty risks.

According to the UK-based hedge fund manager, crypto can achieve the above goal if more crypto exchanges joined a core group of platforms currently integrated with Off Exchange Settlement (OES) solutions.

OES, which allows for off-exchange settlements that tap into the benefits of crypto native tools such as on-chain visibility, has the capacity to not only significantly cut counterparty risk, but also help market players better protect investors from events such as the shocking collapse of crypto exchange FTX.

Anatoly Crachilov, CEO of Nickel Digital, noted in a statement:

We believe OES is the best path forward to mitigate counterparty risks in the crypto ecosystem, eliminating the need for investors to keep their capital at trading venues.”

63% of crypto daily volume on 7 top exchanges using OES

Nickel, Europe’s leading digital asset investment manager and which was founded by Goldman Sachs, JPMorgan and Bankers Trust alumni, says already 7 of the top 20 largest crypto exchanges had integrated with OES by 15 March 2023. 

Another platform is in the process of integrating the solution, which will push the total daily trading volume on OES-supported platforms from 63% to nearly 70%.

Recent analysis conducted by Nickel also revealed that 11% of daily trading volume is on a few well-established platforms, including Coinbase, Kraken and Bitstamp. These exchanges are regulated in Europe and the US.

Interestingly, only 5% of daily trading volume was on exchanges that integrate OES before the FTX collapse. Nickel’s latest study shows that the FTX debacle catalysed the adoption of off-exchange settlements at four exchanges.

How does the OES flow…

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