• Matthew Lempriere, Head of Asia Pacific & UK at BSO


• 12.05.2021 05:15 pm
crypto

To the moon

Crypto currencies have been on the rise for the past several months soaring to a global crypto market cap of USD 1.95T, according to Coinmarketcap. Obstacles to institutional adoption are quickly falling too as keen investors rush to take advantage of a once in a millennium opportunity for yield. Just in the last few months alone we’ve seen major developments in the world of digital currencies - payment companies like Square and PayPal offering crypto exposure to users of its platforms, new exchange traded crypto products cropping up around the world and a growing list of companies including Tesla are making the transition to hold crypto as a treasury asset. 

Institutions are not just here to stock up on crypto though as many are developing digital asset solutions for their own customers. In other words, institutions are ratcheting up investment in digital currencies and the ramps to make them a full-fledged asset class. Cryptocurrencies are going mainstream. 

The challenge with meeting demand

Institutions are investing, using and trading digital currencies more now than at any point since its inception. But despite over 300 digital asset exchanges across the globe the market is still hindered by the lack of available institutional grade infrastructure to fit their needs. For instance, high liquidity is key for institutions to get into the digital asset market at the best possible price, but institutional orders are often too big for exchanges. Scalable frameworks for transaction management and institutional grade security are a must for keeping books in order when it comes to compliance with increasingly robust rules for crypto trading. The time is ripe for disruptive exchanges to seize the lead in a competitive market and become a trusted partner in the digital asset world.

The problem with public internet

For any exchange offering looking for an edge, the network is critical, but all too often these networks are not up to the task. Crypto exchanges have increasingly turned to public cloud connectivity to meet the growing demand for high speed and reliability when providing customers with access to their markets, but public clouds leave them more exposed to security breaches and scamming. Nascent, hobbled infrastructure and the lure of a huge payday have just been too enticing for cyber-attackers and in fact according to a report from Traders of Crypto, 70% of the past decade’s financial hacks involved stolen bitcoin. This is not good for a young industry trying to build legitimacy, investors having to evaluate whether an exchange’s security is adequate or not is not something they want to do and can result in them being put off the crypto industry entirely. 

Also, in a market that is under increasing scrutiny by regulators, public internet access can simply no longer meet the demands for KYC/AML, reliability and nanosecond accuracy that market participants expect. Crypto institutions face a growing list of regulatory requirements against which they must show compliance. Demonstrating data sovereignty, adhering to real-time reporting requirements and creating forensic visibility of trading activity places a heavy compliance burden on market participants’ infrastructure.

Keeping the crypto boom, booming

As global digital currency markets continue to adapt to an ever-changing world, crypto institutions cloud strategies must constantly evolve to keep in step with global trading trends, regional developments, regulatory changes, and demand for different types of market products. Firms need to be able to rapidly deploy new infrastructure for – new geographies, new exchanges, and new asset classes – to drive growth and ensure compliance.

Luckily, there are solutions that can help. Take private cloud networks which offer all the benefits of the cloud and because data is never routed via the public internet it’s rarely exposed to cyber-attacks. Furthermore for the most pioneering crypto institutions looking to expand rapidly, managed cloud access solutions can help them quickly connect with existing digital asset markets around the world and with leading cloud service providers. An experienced connectivity partner can help tailor and bring these private connectivity solutions to life while providing dedicated support and visibility over all infrastructures. 

The big guys are putting their funds into digital currency and the entire space has seen meteoric growth. Yet there are still many opportunities on the horizon. A digital strategy focused on privacy, compliance and speed along with the help of a trusted connectivity partner will arm crypto institutions with the effective cloud connectivity strategy to succeed and ultimately keep the crypto boom, booming.