By Josiah Wilmoth
A former New York Mercantile Exchange (NYMEX) executive has unveiled plans to launch an institutional cryptocurrency exchange on which professional investors and broker-dealers can trade cryptoassets.
Former NYMEX Exec. to Launch Institutional Cryptocurrency Exchange
In October, J. Robert Collins Jr., who served as NYMEX president from 2001 to 2004 and oversaw its move from open outcry to electronic trading, intends to launch the San Juan Mercantile Exchange, a cryptocurrency exchange that he purports will best currently-existent trading platforms in both security and reliability.
“From a fiduciary standpoint, there’s almost no one taking chances with existing crypto websites,” Collins said of institutional traders during an interview with Bloomberg. “What we want to prepare for and help facilitate is when a really large broker-dealer wants to give access to their millions of clients but they want to do it in a safe and sound, secure way, run by professionals.”
Anecdotal evidence from cryptoasset hedge fund executives indicates that there is significant institutional interest in cryptoassets, but they have yet to make a meaningful entry into the marketplace, which remains largely comprised of retail investors.
There are a variety of conventional cryptocurrency exchanges that offer services designed for institutional investors, but the prevalence of hacks and chronic outages during periods of intense market volatility have made many institutions uncomfortable placing their assets on these trading platforms.
Platform Will Process up to 1.5 Million Transactions Per Second
Collins believes that, due to his experience as head of NYMEX and the fact that the platform will exclusively serve institutions, these traders will feel more comfortable entering the cryptoasset marketplace. He also plans to launch a bank in tandem with the exchange, which will hold customer deposits and help the company evade the chronic difficulty of finding a bank willing to service it.
He advertises that the platform will process as many as 1.5 million transactions per second, which is slightly more than Binance — the world’s second-largest cryptocurrency exchange — is capable of facilitating.
“The NYMEX experience, in terms of having to learn to adapt, has informed me looking at this industry and I see it needs help adapting to what really is this invention centered around blockchain,” he said. “Someone will help it adapt. We think our exchange accelerates that process.”
However, Collins has a long way to go before the San Juan Mercantile Exchange becomes a reality. In addition to regulatory obligations, he still needs to ink an agreement with a digital asset custody provider, as well as attract exchange members, who will not only have to undergo accreditation and KYC/AML verification but also own a percentage of the exchanges.
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