<p><b><span data-contrast="auto">Crypto Prime Brokerage as an Enabler</span></b><span data-contrast="auto"> </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><span data-contrast="auto">Crypto prime brokerage will be a key service layer essential to riding the momentum of institutional forays. Particularly, these white glove services are similar to forex trading that institutions are familiar with. However, the true opportunity lies in the dissimilarities in where they operate in — crypto markets vs. traditional ones. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><span data-contrast="auto">For example, the crypto market is known for its fragmentation and pre-funding. Fragmentation spreads liquidity across venues, making it inefficient to manage different margins in multiple exchanges. Additionally, the pre-funding requirement in exchanges is very different from TradFi, where funds will be kept with a prime broker or a futures commission merchant.</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><span data-contrast="none">The combination of liquidity fragmentation and pre-funding requirements are the pain points that a crypto prime broker can address through capital optimization. </span><span data-contrast="auto">Crypto prime brokers can offer a single point of access to liquidity with the necessary credit lines, while </span><span data-contrast="none">reducing cost of execution </span><span data-contrast="auto">with top-tier fees to each exchange, irrespective of traded volumes, which is important in the current muted</span> <span data-contrast="auto">environment. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><b><span data-contrast="auto">More Down the Road</span></b><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><span data-contrast="auto">Crypto prime brokerage is still evolving. The majority foresee its scope expanding to different types of executions such as going long on one DeFi protocol and short on an exchange (i.e. Ce-DeFi prime) while capitalizing on the influx of OTC volumes. </span><a href="https://www.matrixport.com/?utm_source=theblock&amp;utm_medium=article"><span data-contrast="none">Matrixport</span></a><span data-contrast="auto"> is a leading global provider of custodian and prime services for crypto hedge funds pushing the boundaries of what is possible in crypto prime services, offering unparalleled DeFi connectivity across 11+ EVM chains and 40 whitelisted defi protocols.</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><span data-contrast="auto">The taste of crypto prime brokerage is not going to be one flavor and investors will need someone who will be able to broker all of that in one. Particularly, players that are able to evolve their services will stand out of the crowd, such as successfully replicate a hybrid model of prime with centralization, along with digital ledger technology (e.g. using smart contract applications on settlements). Other areas of value-add service innovation would include </span><span data-contrast="none">incorporating research-driven trade ideas coupled with capital introduction programs to jointly scale assets under management.</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><span data-contrast="auto">There is no doubt that crypto prime brokerage will attract the capital that could be the launchpad for our industry’s next big leap. The key is the evolution of its financial and technological features to drive efficiency and trust, ensuring that institutional interest is converted into active participation. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276}"> </span></p> <p><em>This post is commissioned by Matrixport and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.</em></p><br /><span class="copyright"><p>© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.</p> </span>