Cumberland: Cryptocurrency services face clear specialization and regulation

Analysts at Cumberland DRW believe that the collapse of the FTX crypto exchange affected the structure of the crypto market.

Experts say that centralized crypto platforms are now using an all-in-one model: liquidity, clearing, settlement and even lending are combined limited circle of market participants. A similar trend is emerging in the crypto derivatives market, where leverage providers are the same legal entities as liquidity providers.

According to Cumberland analysts, a new world is now emerging, in which assets and capital will not be placed on centralized exchanges:

“After the FTX crisis, digital assets will reside in countless wallets around the world, with storage, lending, settlement, clearing and liquidity functions provided by multiple intermediate nodes and providers in an interconnected but not interdependent network.”

Analysts argue that OTC trading is the lifeblood of spot FX liquidity. In the future, this will become more and more important for the crypto industry. Cumberland believes that by 2023 there will be a plethora of regulated entities that will become trusted providers of various well-defined crypto services.

Each of them will create their own niche and become a partner in a network of other providers in order to jointly offer a full range of services to the end user. This is already being done by banks around the world, which have included over-the-counter foreign exchange liquidity in their settlement mechanisms and offer clients leverage and custody services.

Analyst company Glassnode reported that on November 13, the withdrawal of bitcoins from cryptocurrency exchanges to wallets reached an almost historical maximum.