Digital asset exchange Bitfinex and Koine, a London-based digital asset custody provider, have launched an institutionally oriented post-trade service that mitigates counterparty risk and the use of private keys in the clearing and settlement of cryptocurrencies. Koine is licensed by UK regulator, the Financial Conduct Authority.
The trading environment aims at meeting the needs of institutional investors, for example, Bitfinex has algorithmic trading, and the collaboration means that fund managers will have a separate custody solution while maintaining continuous ownership throughout the trade lifecycle. The combination of cross-venue operability and real-time settlement with cleared funds is expected to boost algorithmic traders’ capital efficiency leading to growth in trading volumes. f
Koine’s security model replaces the cold storage and hot wallet model that can compromise the security of private keys as a result of still needing to be “eye-balled” by staff. This security model along with fiat custody and DvP settlement provides a post-trade solution relevant to traditional capital markets.
“Collaborating with Bitfinex to help bring new funds into their trading environment is an extremely important step in our evolution,” said Hugh Hughes, chair and CEO at Koine, in a statement. “It is leading exchanges like these that will benefit from the shift to a more traditional market structure that will quickly lead to institutional capital participation and the rapid growth of trading from algorithmic funds.”