Citadel Securities and Virtu Financial, two financial services providers and trading firms, are teaming up to create a trading ecosystem around digital assets. The collaboration is intended to make it easier for retail investors to access cryptocurrency markets and underscores the growing institutional adoption.
Both Citadel and Virtu have established themselves as trading firms and market makers in the traditional financial industry. The joint project would be the first big step into the emerging cryptocurrency industry for both. They are supported in their efforts by Fidelity Investments and Charles Schwab Corp., as Bloomberg reports.
Citadel steps into crypto
In January, the subsidiary of hedge fund giant Citadel LLC closed a $1.15 billion funding round led by U.S. venture capital firm Sequoia Capital and cryptocurrency investment firm Paradigm. A move into the crypto space was hinted at in the press release at the time, which includes plans for a complete “trading ecosystem” with a marketplace for deep liquidity.
“This marketplace is intended to create more efficient access to deep pools of liquidity for digital assets. So a group of industry leaders are working closely together to facilitate the safe, clean, compliant and secure trading of digital assets.” - Anonymous source in a conversation with Coindesk
The trading firm has been on the lookout for executives to build out its comprehensive crypto stack for some time now. The move reflects a change of opinion on the part of Citadel founder Ken Griffin. In an interview in March, the billionaire admitted for the first time that he had underestimated the cryptocurrency industry. He had long been a self-proclaimed skeptic of the space but has been proven wrong by its rapid growth to almost $3 trillion.
U.S. financial services providers deepen their involvement in the industry
The integration of digital assets into the service offering of traditional financial institutions is progressing globally. We saw a visible move especially by U.S. banks throughout the last year. JP Morgan, Goldman Sachs, Citibank, Fidelity; the list of U.S. financial institutions offering their clients services in the space seems to be endless. In Europe, too, the first involvement of traditional financial institutions was observed with the Sparkassen Group and Banca Generali.
They have recently been joined by U.S. trading giants Jane Street and Jump Trading, with both identifying huge growth potential for the industry. Both firms are particularly interested in the area of decentralized finance (DeFi), which highlights the increasing flow of capital between traditional financial markets and the emerging DeFi ecosystem.
