Wall Street’s largest banks are tapping into the crypto market through derivatives

Episode 51 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and James Stickland, CEO of Elwood Technologies.

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Elwood Technologies — an Alan Howard backed digital asset platform that is building trading infrastructure for institutional investors — closed a $70 million Series A last month co-led by Goldman Sachs and Dawn Capital.

In this episode of The Scoop, Elwood CEO James Stickland sits down with host Frank Chaparro to discuss Elwood’s recent fundraise, and to provide a closer look at the institutional activity that is occurring in the crypto market.

According to Stickland, institutional exposure to crypto “is more on the derivatives end of the market,” largely because of the lucrative spreads:

“Crypto derivative specialists are still able to make spreads they can drive buses through. Which is fantastic for them, which is obviously therefore creating FOMO, and with the synthetic nature and capability of it, is driving that real appetite.”

While derivatives are, for now, the extent of many institutions’ crypto exposure, Stickland claims that regulatory clarity regarding digital assets will “really allow engagement on spot and holding on balance sheet.”

Stickland views the combination of coming regulatory clarity along with more robust market infrastructure as having a powerful impact on the market in the long run:

“Getting great prime, getting great credit approved facilities, and the regulator making a call — that plus having some real stable infrastructure, that lights this thing up beyond all belief.”

During this episode, Chaparro and Stickland also discuss:

  • Market liquidity conditions
  • The evolution of neobanks
  • Crypto 'dark pools'

This episode is brought to you by our sponsors FireblocksCoinbase Prime & Cross River
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