Crypto spot market structure pushing institutions towards synthetics

Credit risk and custody challenges with spot could push investors to derivatives and ETPs

bitcoin-currency

As institutional investors start to use cryptocurrencies, experts say the differences in market structure mean they’re likely to stick to synthetic exposures to the asset instead of dabbling in the spot cash market popular with retail.

Spot cryptocurrency trading has remained a retail-driven market, with execution and custody happening at the exchange, but synthetic exposures through derivatives and exchange-traded products (ETPs), for example, offer a familiar product for institutions looking

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