Institutional demand for cryptocurrencies has skyrocketed over the last few years. From hedge funds to corporates, everyone wants to have exposure to cryptocurrencies. This trend encouraged several new and existing companies to launch institutional crypto exchanges. These exchanges are usually capable of handling large crypto orders.
Archax, based and authorized in London, has become the latest to launch an institutional cryptocurrency exchange. Finance Magnates reported last week that the exchange would operate 24/7 and initially list only two cryptocurrencies, Bitcoin and Ethereum, against USD.
“The Archax crypto exchange has been designed and built to provide all the controls and processes that institutional users expect,” the Co-Founder and Chief Executive Officer of Archax, Graham Rodford, told Finance Magnates in a recent interview.
“We operate it just like a traditional exchange – so we remain purely the market operator and do not trade against our clients. We also run continuous market surveillance and chain analysis on all holdings to ensure we provide a safe and secure platform for institutions to trade, free of any potential manipulation.
Meeting the Demand with Service Expansion
Archax was established in 2018, partnered with several other prominent companies over the years, and received backing. Earlier this year, the company launched a crypto custodian service and a primary issuance service, allowing start-ups and early-stage businesses to raise capital. It also launched a tokenization engine.
Despite being a relatively new player in the market, the growth prospect of Archax’s crypto exchange is clear. It also plans to expand its service over the next few months aggressively.
“We will be adding other key cryptocurrencies over the coming weeks – Solana and Litecoin will be next, as well as supporting pairs against USDC and GBP,” revealed the CEO of Archax. “We intend to have around 10-12 pairs by Q4 this year. We see layer 1 and 2 as where most institutional demand is, since the infrastructure is going to be critical.”
Who Are the Target Customers?
Institutional investors have a broad classification, and Archax, with its new exchange, is targeting all of them.
“We are targeting clients from individual professional investors all the way up to the largest institutional firms,” said Rodford. “Key people we are talking to at present include family offices, payment firms, wealth managers, hedge funds, market makers, asset managers, private banks, and investment banks.”
He further added that “as cryptocurrencies are unregulated instruments in the UK at present, there is nothing stopping retail investors from becoming members of our crypto market and trading on it. They could also access through a member broker if they wished too.”
How Are Crypto Regulations in the UK?
Indeed, cryptocurrencies are still unregulated in the United Kingdom. However, the government has been actively pushing towards bringing crypto regulations. A bill recently approved by King Charles classifies the trading of cryptocurrencies as a regulated activity and brings stablecoins under the scope of payment rules.
Furthermore, all crypto service providers operating in the country must be registered with the Financial Conduct Authority (FCA) to ensure compliance with the anti-money laundering (AML) rules. The process has been rigorous and slow, forcing several crypto companies to drop their UK ambitions. Despite the challenges, Archax was the first company to receive the FCA registration.
“In the UK, you don’t currently need to be regulated by the FCA to run a crypto exchange (retail or institutional); you just need to be on their FCA Cryptoasset Register – the main function of which is to ensure firms satisfy the FCA’s AML criteria,” Rodford explained.
“We believe that being based in and operating out of the UK under the FCA is a key differentiator, as well as running our market to look like a traditional exchange, with all the controls and processes institutions need and expect to see. In essence, as an FCA-regulated digital asset exchange, broker, and custodian, we apply compliance and regulatory standards to all our products and services, regardless of the regulatory status of the assets themselves."
"Archax is focused on the needs of professional and institutional investors and is run by an experienced team from the traditional financial markets space. Our permissions also allow us to provide trading and custody services for regulated tokenized assets, such as digital securities, as well as traditional financial instruments too – so we will be offering a true multi-asset service above and beyond just crypto.”
