DeFinity Markets: Bridging the Gap Between Digital Assets & Institutions: What You Need to Know
Crypto as Collateral for Casinos, EY Fintech Growth Program, & More
If the last weeks and months have taught us anything, it’s that demand for $BTC and even other crypto assets from the largest asset managers, institutions, and even governments is real, and should not be underestimated. By now, every crypto market participant is likely aware that it is these institutions that drive the flows into the major crypto assets, which have a lot of say over what happens in the broader alts market. However, the process of how exactly these institutions come to find their way into crypto may be a little bit less clear.
In today’s edition, we’ll discuss the thought processes and operations behind the scenes when it comes to institutions getting involved with crypto. Specifically, we’ll be covering DeFinity, a key player in the institutional onboarding space. In recent weeks, DeFinity has seen a stark increase in institutional interest, aligning with ETF flows and rhetoric from large asset management firms.
For perhaps the first time, institutions may feel comfortable getting involved with the crypto asset class with much less fear of regulatory risk. Now, the next step is making sure that friction between traditional and decentralized finance is minimized as much as possible…
Stay informed, stay alert ⬇
Background on DeFinity
As mentioned above, DeFinity is all about onboarding institutions. This consists of the DeFinity platform, which facilitates crypto and FX trading, as well as fiat on and offramps, a necessity for institutional players in particular. The team behind DeFinty has existing traditional finance roots, and now they’re applying their talents and infrastructure to maximize the opportunity that is institutional crypto adoption.
Seeing as the platform primarily serves traditional institutions, the selection of crypto assets available to trade isn’t as expansive as DEXs that retail users might be accustomed with. Institutions can get exposure to $BTC, $ETH, $MATIC, $ADA, and other coins and tokens that are added on demand. A key point of differentiation is the vast amount of fiat currencies that DeFinity can accept and onboard, totaling 35+. This is a unique offering, one applicable mostly to institutions.
Beyond its expansive FX offerings, DeFinity also includes a variety of features that traditional features have come to expect, which traditional CEXs, and especially DEXs likely can’t fulfill. Institutions typically operate under guidelines that retail DeFi users are not beholden to. These might include taking into consideration custody risk, counterparty risk, as well as having to abide by certain accounting measures and transparency standards, among other things.DeFinity provides embedded KYC/AML frameworks, FIX API integration, custody agnostic holding, and more.
DeFinity also enables institutions to retain custody of their assets while still being able to still execute trades seamlessly. This is often easier said than done. In DeFinity’s case, a cold-to-hot storage system is used to ensure that the maximum amount of security and custody is granted at all times. Institutions can choose from various custodians, or self-custody using Fireblocks. Importantly, DeFinity also settles trades on the day of, making sure to retain crypto-native qualities of fast settlement, something which isn’t a given in traditional finance.
A change in sentiment of institutions toward crypto has resulted in more opportunities for DeFinity. In September, the team announced a key partnership with BitLine. BitLine is the only industry provider for gaming and casino chip access based on crypto and digital asset holdings.
This is obviously a new area of business for DeFinity, made possible by the early stage of institutional crypto. Specifically, DeFinity and BitLine will be creating a Gaming Repo product, something not seen before. Basically, this will allow HNWIs to access gaming and casino chips by using crypto as collateral.
This unique and exclusive partnership is a first step in the direction of using crypto as collateral for non-crypto related activities. The gaming and casinos space is massive, with Las Vegas, Macau, and other jurisdictions bringing in billions in revenue annually, not an area of growth to be underestimated at all. There are plans to soon roll out this service in major US casinos and gaming jurisdictions. This partnership with BitLine is not something prospective that might happen at some point far away; it has actually just gone live on Thanksgiving…
Just earlier this month, DeFinity also announced that they had joined EY’s FinTech growth program, a competitive selection of UK-based companies operating at the intersection of tech and finance. This is a significant milestone for DeFinity, also marking a transition to a period of even more expansive growth, ideally. This is also representative of a broder acceptance of crypto as a serious asset class, something that can significantly contribute to an institutions performance.
The current cohort of EY’s FinTech growth program actually consists of 16% crypto companies. On average, all of the companies within the FinTech program have raised $8M+, with dozens of employees. So while this is a growth program designed to help promising startups, these companies are actually highly established in their own right. Interestingly, the companies also have an average annual revenue of nearly $4M, a contrast from the vast majority of crypto protocols and projects which often fail to see any meaningful revenues for some time.
Overall, the institutional adoption of crypto is an area that perhaps doesn’t get its due, despite being at least just as, if not more important than onboarding retail. DeFinity has stuck it out, building out their offerings and inking key partnerships, with a lion’s share of rewards made more likely to come their way following the election earlier this month. The vision of the DeFinity team benefits both institutions, which get increased exposure to an emerging asset class, as well as the surrounding crypto ecosystem, which sees more capital inflows, a win-win situation…
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