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Cryptocurrency Market Structure: Crypto-Assets Represent a Truly Global Asset Class

Last week on Valentines Day, the Commodity Futures Trading Commission (CFTC) held a meeting of the Technology Advisory Committee (TAC). There were several interesting presentations and good discussions regarding the emerging cryptocurrency market. One of the discussions was by Richard Gorelick, Head of Market Structure at DRW, who delivered a presentation on the current state of digital assets.

Chicago based DRW is a diversified trading firm, trading its own capital at its own risk across a range of asset classes and strategies in markets around the world. DRW not only invests in real estate and venture capital but has also jumped into the cryptocurrency realm. DRW currently has more than 750 employees in Chicago, London, Montreal, New York and Singapore.

Gorelick stated last year that “DRW is an industry leader known for being on the right side of innovation in the markets.”

The presentation, embedded below, is an excellent snapshot of digital assets via DRW company Cumberland, which was launched as Bitcoin trading desk in 2014.

In the past few years, digital assets have jumped in number. In the early days it was Bitcoin and a few others but today there are more than 1500 crypto-assets with more being launched every month. Over 100 exchanges operate around the world and Cumberland is an active participant with “meaningful volume.”

Gorelick shared some insight into their institutional trading operations including some perspective of algorithmic trading and opportunities for arbritrage. As many people know, there are significant price disparities between digital currencies depending on the exchange. From DRW/Cumberland’s perspective, “Cryptoassets represent a truly global asset class, like FX.”

They are of the opinion that;

“[The] US should adopt a smart, principles-based regulatory framework that encourages professional, responsible market participants to build and invest in cryptoasset businesses in the US.”

To get there the market needs more certaintly as to the legal status of cryptocurrencies, better guidance from regulators and zero tolerance for fraud and scams.

See the presentation embedded below.

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