Institutional investors, High net worth individuals and hedge funds get in on the action

After entering the hearts and wallets of crypto-enthusiasts, digital currencies have started to capture the imagination of institutional investors and hedge funds. High Net Worth (HNI) individuals, too, have started experimenting with the new asset class to balance their portfolios. These entities, in the recent past, have allocated a portion of their capital to this new investment vehicle at a record pace. According to some estimates, at the end of the last year, some $15 billion of institutional assets under management were earmarked to the crypto asset class.

Big players like JP Morgan Chase, the largest American bank, have already got into the game. It has considered issuing debt-linked to cryptocurrency-focused companies. Goldman Sachs pointed to a disproportionate rise in demand for digital currencies from institutions while restarting its cryptocurrency trading desk to aid its clients to deal in bitcoin futures. PricewaterhouseCoopers also partnered with Alternative Investment Management Association and Elwood Asset Management to carry out a survey to understand possible moves by traditional hedge funds in this newish field.

Last year, the global crypto hedge funds had about $3.8 billion in assets under management last year, almost twice the sum in 2019. According to some estimates crypto hedge funds with more than $20 million in assets under management rose from 35% to 46%. Analysts reckon that it won’t take much time for these numbers to grow exponentially, given the ravenous appetite of hedge funds and institutional investors.

In that light, ZebPay, India’s first cryptocurrency exchange has launched the country’s first electronic over-the-counter (OTC) desk for traders who carry out large volume transactions and institutional investors globally.

The solution is squarely targeted towards high net-worth individuals, organisations and trading firms whose requirements are of a different kind given the nature of these transactions. The OTC desk is a user-friendly solution which offers execution in one-click or one-tap. More crucially, this is done in quick time across tight spreads with zero withdrawal fees. In addition to having a trading interface that harnesses best-in-class algorithms to facilitate trading for users, an integration to other systems is also made available via Application Programming Interface (API) to brokers, institutions, quant funds and algorithmic traders.

What sets the solution apart is that it aims to offer “deep liquidity” for a whole range of cryptocurrencies at competitive rates across multiple trade pairs. In other words, assets can be traded for each other on the exchange.

In an interview with Mint newspaper, Avinash Shekhar, Co-CEO, ZebPay, said, “ZebPay aims to create a robust crypto ecosystem and a multi-faceted business where the needs of both the retail and institutional investors are met seamlessly. With ZebPay OTC Desk, we are addressing growing institutional interest in crypto globally and in India. Like other ZebPay products, the OTC Desk also provides a simplified and optimised trading experience coupled with personalised assistance, but specifically for larger volume traders. This will encourage adoption of crypto in the country and help create a mark for India as a major player in this emerging space."

Credit lines, for 24-hours after a trade settlement, are on offer with minimum collateral requirements. Trades can be executed in real-time without the need to “pre-fund” the account. There are a range of order types, including, Immediate Or Cancel (IOC) and Time Weighted Average Price (TWAP) that are specifically designed to cater to customised and bespoke requirements. Myriad fiat currencies and stable coins are supported including the US dollar, British pound, euro, Singapore dollar, dirham, Australian dollar, Tether (USDT) and USD Coin (USDC).

With Bitcoin reaching an all-time high earlier this month, the interest among institutional investors is only slated to go up and services like ZebPay’s OTC Desk fill an important unmet need.

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