Crypto prime brokerages – a new frontier?
Crypto prime brokerages provide an access point for institutions looking to enter the cryptocurrency market. But are they the future?
Crypto prime brokerages are a relatively recent business model which aims to cater to institutions looking to enter the exploding, but shaky, cryptocurrency market.
In the rapidly changing world of crypto, there are developments and experiments constantly, so financial institutions need a robust way to tackle this ocean of digital currencies. Still reeling from the FTX collapse, legal troubles with various key players such as Binance, and constant shifts in the industry, trust for cryptocurrency is also at a low.
Despite the release of the first Bitcoin ETF leading to a more mature market structure, the cryptocurrency market is still largely unregulated, so financial institutions need a way to navigate it without risking huge amounts of capital.
In response to this, there has been a rise in crypto prime brokerages, which are potentially a new frontier as the financial markets open up to digital assets.
But what are crypto prime brokerages, and how do they work?
What is a crypto prime brokerage?
To understand what a crypto prime brokerage is, we need to understand what a prime broker is.
A prime broker is a specialised service offered by banks and other financial institutions mainly to hedge funds and investors. They will facilitate large-scale and complex investment activities, which could include securities lending, leveraged trading and cash management. Prime brokers can often deal with trade clearing and settlement.
Therefore, a crypto prime brokerage is a type of financial service provider that offers a similar range of services but instead caters to the crypto market. Crypto prime brokers can provide a suite of services to clients that can help them navigate a relatively new and volatile market.
Trading & execution
Due to the volatile nature of the cryptocurrency markets, financial institutions are likely to need assistance with the wild swings of crypto prices.
Specific trading strategies can be implemented that provide exposure to the markets without taking on huge amounts of risk.
Custody
Theft and fraud in the crypto space are common. Crypto prime brokerages can provide access to secure storage solutions for institutions.
Risk management
Risk is crucial within the cryptocurrency markets, and effective risk management is an incredibly valuable asset for firms.
Reporting & compliance
Crypto prime brokerages can assist with the complex regulatory environment of crypto markets, which often also has no regulation at all. Reporting tools and compliance with the FCA are valuable services.
Liquidity
Liquidity in the cryptocurrency markets can be an issue, particularly with cryptocurrencies that have smaller trading volumes. Crypto liquidity pools are a huge part of increasing liquidity in the nascent crypto markets, so crypto prime brokers can advise firms on how they can approach liquidity.
Decentralised exchanges (DEXs) are a relatively new phenomenon, and DeFi organisations such as Uniswap are pioneering new ways of providing liquidity, which firms will need to understand and tackle.
While you are here, you may be interested in this recent podcast with Tom Higgins, CEO of Crypto Technology infrastructure firm Gold-i where he discusses Crypto Market structure and the state of Crypto Prime Prokerage:
Best crypto prime brokers
There are several crypto prime brokerages already on the market, offering many of these services to clients, and others that provide simialr services for institutions making access to Digital Asset trading more secure. We list the major Crypto Prime Brokers below. (Those that are shown as verified are companies that LiquidityFinder knows well and which are listed on our site.)
GCEX
GCEX is a leading digital prime broker that provides institutional clients with secure and efficient access to the cryptocurrency market. Founded in 2018 by Lars Holst, (previously the co-Founder and CEO of CFH Clearing) GCEX offers a comprehensive suite of services, including digital asset custody, execution, and settlement, as well as credit intermediation and risk management solutions.
With its cutting-edge technology and experienced team, GCEX's platform is designed to meet the stringent requirements of institutional investors, offering deep liquidity, competitive pricing, and robust security measures. GCEX's commitment to transparency, regulatory compliance, and client satisfaction has established it as a trusted partner for institutions seeking exposure to digital assets. GCEX also provides a 'Broker-in-a-box' solution, and another offering 'Crypto-in-a-box' providing everything required to set up a crypto exchange. GCEX also provide comprehensive FX and CFD trading solutions.
Listen to a discussion with Lars Holst, CEO of Digital and Traditional Assets Prime Broker GCEX on Spotify:
Sage Capital Management
Sage Capital Management is a leading Prime of Prime solutions provider specializing in digital asset liquidity. The company offers institutional-grade crypto spot and perpetual liquidity, leveraging its extensive market relationships and significant trading volumes to secure prioritized execution and competitive pricing for its clients. Founded in 2015, Sage Capital Management has established itself as a key player in the cryptocurrency market, providing 24/7 access to reliable and competitive institutional-focused liquidity.
One of Sage Capital Management's key strengths is its ability to streamline trade settlement and offer pre-agreed margins across all digital assets, including both exchange trades and spot transactions. The company's funds are held with a regulated custodian to eliminate exchange risk, and clients can benefit from fast onboarding through a UK FCA-regulated entity. With a team comprising experienced professionals such as former fund managers, quantitative analysts, AI algorithmic trade designers, and compliance specialists, Sage Capital Management offers tailored liquidity solutions, comprehensive risk management, and customizable support to meet the unique needs of financial institutions, market makers, and funds in the digital asset space.
https://www.sagecapital.co.uk/
Hidden Road
Hidden Road is a leading global credit network for institutions, providing prime brokerage, clearing, and financing services across both traditional and digital assets. Founded with the mission of becoming the premier global credit network for institutions, Hidden Road offers a unique, conflict-free approach by not competing with its clients or having conflicts of interest with counterparties, custodians, or trading venues. The company's innovative platform leverages a modern technology stack and quantitative-driven approach to enable real-time risk management across various venues, products, and asset classes.
One of Hidden Road's key strengths is its comprehensive suite of services, which includes its recently launched Synthetic Prime Brokerage offering, Route28. This product covers OTC Swaps across major asset classes, including FX, Equities, Commodities, Digital Assets, Energy, and Rates, making Hidden Road one of the few prime brokers globally to offer cross-margining and margin financing across such a wide range of products.
The company has also expanded its digital asset capabilities by integrating with major cryptocurrency exchanges and accepting BlackRock's BUIDL token as collateral, providing clients with innovative solutions for trading and risk management in the rapidly evolving crypto market
With its strong capital base, proprietary technology infrastructure, and commitment to minimizing counterparty and credit risk, Hidden Road is well-positioned to meet the complex needs of institutional clients in both traditional and digital asset markets.
Nexo Prime
Founded in 2017, Nexo Prime offers trading desks a platform to trade, borrow, lend and securely store digital assets, as well as trading via MT4 and MT5.
Nexo Prime even offers its own token: NEXO. With this token, users can be granted access to loyalty programs which offer higher yield savings and lower interest rates on loans.
Similar to how Sushi and PancakeSwap both offer native tokens within their network, it also encourages user loyalty and trust within the community.
The company has other innovative offerings such as its ‘Dual-Mode’ crypto card, which allows for spending with or without using the underlying crypto assets.
Zerocap
Zerocap is a digital prime broker that provides institutional investors and high-net-worth individuals with access to the cryptocurrency market. Founded in 2017, Zerocap offers a range of services, including crypto market making and liquidity, treasury and lending solutions, and digital asset custody.
Zerocap's trading desk, custodian, and margin facility enable clients to access unique liquidity, crypto market making, and wealth management services. The company also bridges the gap between fiat and cryptocurrency treasury management for corporate and institutional clients. Additionally, Zerocap provides support for a wide variety of digital assets, including cryptocurrencies, NFT art, metaverse land, tokenized funds, and tokenized carbon credits.
With a focus on serving the needs of institutional investors, Zerocap leverages its technology platform to facilitate the execution and settlement of transactions across multiple cryptocurrency exchanges. The company prioritizes security, regulatory compliance, and client confidentiality in its operations.
FalconX
FalconX, which is a cryptocurrency brokerage and digital asset trading platform serving global institutional clients.
Founded in 2018, the company provides principal liquidity, derivatives, direct market access and ETF solutions, as well as its FalconX 360 tool – a digital asset trading platform.
FalconX markets itself as “the largest digital asset prime brokerage” and is the first and only Commodity Futures Trading Commission (CFTC) registered cryptocurrency swap dealer.
LTP (LiquidityTech Protocol)
LTP (LiquidityTech Protocol) is s a leading digital asset prime broker, focused (for now) on the Asia-Pacific (APAC) region. The company operates as a link between centralized exchanges (CEXs) and decentralized exchanges (DEXs), serving over 300 institutional clients and facilitating annual trading volume exceeding $400 billion. LTP’s suite of services includes prime brokerage, capital introduction, lending, and custody solutions, all tailored specifically for institutional clients.
LTP says it offers robust, optimized infrastructure and crypto-native expertise, which enable traders to access a broad spectrum of CeFi and DeFi liquidity with speed, cost-efficiency, and security. The company’s platform integrates with 13 CEXs and 1 DEX, offering features such as efficient exchange account funding, simple sub-account rebalancing, and improved API rate limits ideal for high-frequency trading strategies. LTP has partnerships with industry leaders like Finery Markets, Bitstamp, and Copper.co, which have enhanced its offerings in areas such as OTC liquidity, lending solutions, and off-exchange settlement.
Since 2023, LTP has hosted its 'Liquidity Summit' with the next event, Liquidity 2025, taking place in Hong Kong on April 7, 2025. The summit brings together key players in the digital asset industry, including trading institutions, asset managers, banks, exchanges, and regulators, to discuss trends, innovations, and the future of institutional digital asset trading.
https://www.liquiditytech.com/
Coinbase Prime
In 2018, Coinbase released Coinbase Prime, a platform specifically designed for institutional clients. It offers advanced trading, custody, and prime brokerage services for cryptocurrencies.
The main offerings are features such as algorithmic orders, advanced charting, and custody services. Institutions also have the reassurance of Coinbase’s dominance in the industry – being the largest cryptocurrency exchange in the United States by trading volume.
https://www.coinbase.com/en-gb/prime
Copper
Copper is a leading crypto prime broker that provides institutional investors with a comprehensive suite of services to access and trade digital assets. Founded in 2018, Copper has quickly established itself as a key player in the crypto prime brokerage space, offering a secure, compliant, and efficient platform tailored to the needs of institutional clients.
One of Copper's core offerings is its secure custody solution, which leverages multi-party computation (MPC) technology. This allows clients to safely store their digital assets while maintaining quick access to trading opportunities. Copper's custody solution is designed to minimize the risk of theft or loss, providing institutional investors with peace of mind when engaging with the digital asset market.
In addition to custody, Copper offers a range of trading and settlement services. The company provides access to an aggregated liquidity pool, connecting clients to multiple exchanges and OTC desks to ensure best execution and pricing. Copper's platform enables fast, secure, and automated settlement of digital asset transactions, reducing counterparty risk and improving efficiency for institutional traders.
Copper also places a strong emphasis on regulatory compliance, recognizing the importance of operating within the legal and regulatory frameworks of the jurisdictions in which it operates. The company works closely with clients to ensure they meet their compliance obligations, providing a trusted and compliant environment for institutional digital asset trading.
Zodia Custody
Zodia Custody, a subsidiary of Standard Chartered, is a digital asset custody platform designed to serve the needs of institutional investors in the cryptocurrency market. Launched in 2020, Zodia Custody leverages Standard Chartered's expertise in providing secure, compliant, and reliable custody services to offer a trusted solution for safeguarding digital assets.
Zodia Custody's platform is built on secure, resilient, and scalable technology, ensuring the safety and integrity of clients' digital assets. The company employs a range of security measures, including cold storage, multi-signature authentication, and comprehensive insurance coverage, to protect clients' assets from theft, loss, or unauthorized access.
In addition to its robust security measures, Zodia Custody emphasizes regulatory compliance and operates within the legal and regulatory frameworks of the jurisdictions in which it serves clients. The company's affiliation with Standard Chartered, a leading global bank, further enhances its credibility and trust among institutional investors.
Zodia Custody's services are tailored to the unique needs of institutional clients, such as asset managers, family offices, and corporations. The platform supports a range of digital assets, including Bitcoin, Ethereum, and other major cryptocurrencies, as well as selected tokens and stablecoins. Clients can access their assets through a secure, intuitive interface, which provides real-time reporting and portfolio management tools.
While Zodia Custody is primarily focused on providing custody services, it also offers complementary services such as transaction settlement and reporting, making it a valuable partner for institutional investors trading in digital assets.
Laser Digital
Laser Digital is a subsidiary of Nomura Holdings, a leading global financial services group. Launched in 2022, Laser Digital is a digital asset company that offers institutional clients access to the cryptocurrency market through a range of products and services.
While Laser Digital is not explicitly marketed as a digital asset prime broker, it does provide some services that overlap with those typically offered by prime brokers in the digital asset space. These include:
- Trading: Laser Digital facilitates the trading of cryptocurrencies and other digital assets for institutional clients.
- Custody: The company offers secure custody solutions for digital assets, ensuring the safety of clients' funds.
- Advisory: Laser Digital provides advisory services to help institutional clients navigate the complexities of the digital asset market.
- Venture capital: The company also operates a venture capital arm, investing in promising blockchain and digital asset startups.
Laser Digital leverages Nomura's expertise in traditional financial services and combines it with a deep understanding of the digital asset market to provide institutional clients with a trusted and compliant gateway to the world of cryptocurrencies.
LMAX Digital
While not a traditional prime broker, LMAX Digital plays a significant role in institutional cryptocurrency trading. Launched in 2018 as a subsidiary of LMAX Group, a leading independent operator of institutional execution venues for FX and cryptocurrency trading, LMAX Digital is a spot cryptocurrency exchange built specifically for institutional investors.
LMAX Digital offers a secure, transparent, and efficient trading environment for digital assets, with a focus on providing deep liquidity, low latency, and reliable execution. The platform leverages LMAX Group's proven technology and expertise in the foreign exchange market to deliver a robust trading infrastructure for cryptocurrencies.
Although LMAX Digital does not offer the full range of services typically associated with prime brokers, such as custody and lending, it does provide institutional-grade (secure) access to the cryptocurrency market. The platform's real-time market data, granular reporting, and API connectivity enable seamless integration with institutional trading systems and risk management processes.
By offering a trusted and regulated trading environment, LMAX Digital has become a key player in the institutional crypto trading ecosystem, complementing the services provided by prime brokers and contributing to the overall growth and maturity of the digital asset market.
Bosonic
Bosonic, while not a traditional prime broker, is an important player in the institutional digital asset space, offering a unique solution that complements the services provided by crypto prime brokers. Founded in 2016, Bosonic is a decentralized financial market infrastructure provider that enables the atomic exchange and settlement of digital assets.
Bosonic's platform is designed to address some of the key challenges faced by institutional investors in the digital asset market, such as counterparty risk, settlement inefficiencies, and fragmented liquidity. By leveraging blockchain technology and smart contracts, Bosonic facilitates the direct, peer-to-peer transfer of digital assets between institutional counterparties, eliminating the need for intermediaries and reducing settlement risk.
The company's flagship product, Bosonic Network, is a layer-2 blockchain solution that connects institutional market participants, including exchanges, custodians, and prime brokers, enabling them to trade and settle digital assets in real-time. This network enhances liquidity and efficiency in the institutional crypto trading ecosystem, making it easier for investors to access and trade digital assets.
Although Bosonic does not provide the full suite of services offered by prime brokers, its innovative technology and focus on improving the infrastructure for institutional digital asset trading make it a valuable contributor to the crypto prime brokerage landscape. By collaborating with prime brokers and other service providers, Bosonic helps to create a more seamless, secure, and efficient environment for institutional investors to engage with the digital asset market.
The future of crypto brokerages
There is likely to be a bright future for crypto prime brokerages and crypto exchanges as the popularity and awareness of cryptocurrency increases.
How current crypto exchanges will fare against decentralised exchanges is hard to know, but there is likely going to be competition between the two exchange styles in years to come.
There are significant hurdles for crypto prime brokerages, specifically around regulation, and what some have referred to as the ‘immaturity’ of the industry. The tightening of regulation may mean that some struggle to survive.
Centralisation of the cryptocurrency markets and bridging the gap between global institutions and the $2.38 trillion market cap is not without risks but is certainly worthwhile if done right.
The future of crypto prime brokerages could be in adopting a more decentralised framework, one that complements the philosophy of cryptocurrency (as we’re seeing with NEXO).
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Author
| Caleb is a financial copywriter with a specialisation in fintech and forex. Former copywriter at Barclays and Paysafe. Contributing writer for LiquidityFinder. You can message Caleb here. |