The “institutional wall of capital” that approached crypto when Bitcoin first crossed the “Hoffman Line” (a $100 billion market cap) in Fall 2017 officially arrived in in the second half of 2020 — and shortly, will cause an historic paradigm shift in financial markets, as Bitcoin accelerates its unprecedented, meteoric rise.
Consequently, the demand for institutional grade legacy financial products and services is about to explode — in a space that until this year, was for all intents and purposes immaterial. Custodial solutions, multi-signature wallets and second layer liquidity and privacy solutions are reaching critical mass — just as game-changing financial products like Bitcoin ETFs are on the cusp of widespread, global approval.
Consequently, we are about to witness dramatic increases in the amount of crypto hedge funds and investment trusts — and equally massive crypto sector demand from pension funds; endowments; insurance companies; family offices; and high net worth individuals.
The companies that achieve first mover status in the soon-to-explode crypto service industry could be amongst the biggest winners of the 2020s — particularly those who most effectively bridge the gap between modern technological innovation and old school service requirements.
To that end, crypto industry infrastructure is being rapidly built — most of it, behind the scenes. The reason being, to support the massive wave of incoming institutional investment. To that end, prime brokerage capabilities must be enabled, in institutional grade quality, to support simultaneous investment in legacy and crypto assets.
Prime brokerage is the turnkey solution of choice for institutional investors — where a broker supports all back office activities, including trade settlement, custody, margin loans, securities lending; and in the case of crypto assets, staking. It is the backbone of the legacy hedge fund industry and the investing arms of myriad non-financial institutions — and now, will support the investing activities of hundreds, if not thousands of crypto-focused entities.
To wit, here is what Raoul Pal, a crypto expert with deep experience in the mainstream investment world, said in an October 19th interview at the 31 minute timestamp.
“The (U.S. Office of the Comptroller of the Currency) just allowed custody of Bitcoin. That’s a code word for prime broking for hedge funds. That’s coming, so Paul Tudor Jones was right.”
And here, Michael Saylor, CEO of Microstrategy, a NASDAQ-listed company (ticker: MSTR) that just invested $425 million of its Treasury in Bitcoin, in an October 20th interview. First, at the 59 minute mark, he responds to a question about potential catalysts for global crypto adoption.
“(Regarding) institutional onramps, as the prime brokerages and banks come online; and people allow you to borrow against Bitcoin, and generate yield on it; and when it’s possible to buy $500 million worth in a five minute phone call; and just wire it, easily; it will be a big catalyst. These are pretty straightforward (concepts), and I don’t’ think they’re far away.”
And then, at the 60 minute mark, he responds to a question about the best way to invest hundreds of millions of dollars in Bitcoin.
“You need an institutional grade prime broker — someone that can buy it for you in scale. You can do it through institutional grade funds that will buy it for you, or go directly to exchanges via institutional grade OTC desks. There are a number of them, and two years ago there weren’t many. I think 2020 was a big year, with lots of really great institutions coming online, and a lot of really good exchanges and brokers. That makes a big difference, and we’ll see a lot more in the coming 12 months.”
In the next 12–18 months, prime brokerage service will likely be ubiquitous in the crypto space — which is why the timing of the launch of unique, state-of-the-art, all-in-one prime brokerage software by Digital Lending Capital Corp, or DLCC, couldn’t be better.
Today, the crypto prime brokerage space is extremely fragmented, with no all-in-one providers, and significant deficiencies and inefficiencies in essentially all market segments. Per below, there are numerous problems being actively addressed — which, when resolved, will enable crypto institutional investors to execute as efficiently as those in the legacy financial realm.
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Fortunately, DLCC has resolved these issues with proprietary software that is in the process of being launched. When online, it will be uniquely suited to support the all-in-one requirements of crypto AND legacy financial institutions — including those active in both markets simultaneously.
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Equally important, no other product we are aware of is currently capable of supporting the broad suite of back office crypto services — which shortly, DLCC will have on display for the entire institutional investment world.
DLCC strives to not only provide the best crypto back office technology and services, but with the institutional grade professionalism top institutions desire. Given the management team’s deep experience in top Wall Street trading, brokerage, and information technology roles, best practices are a top priority, to provide the highest quality, most user-friendly experience possible.
If you are an institutional investor in the crypto space; or seek to become one shortly; please check out the firm’s website below, or email me at ahoffman@cryptogoldcentral.com; or Mike Hamill, Global Head of Hedge Fund Sales, at mike@dlcc.co . It won’t be long before DLCC is a well-known brand, catering to small and large institutional crypto investors alike!
Digital Lending Capital Corp is Crypto’s first full-service Prime Brokerage software solution — fully online, and actively operating in today’s exploding digital market. For more information,please go to https://www.dlcc.co/; email me at ahoffman@cryptogoldcentral.com; or Mike Hamill, Global Head of Hedge Fund Sales, at mike@dlcc.co.