Genesis, a prominent cryptocurrency firm, has announced the closure of its U.S. based crypto trading desk. This decision follows the recent decrease in trading volumes and market volatility. Despite this, Genesis will continue to provide its digital asset lending services to institutional clients. The closure of the trading desk marks a significant shift in the company’s operations and highlights the challenges faced by the cryptocurrency industry in the current economic climate.
Genesis Trading: Closing its Doors in the US
Genesis Trading, the trading arm of Digital Currency Group (DCG), a prominent crypto venture capital firm, is preparing to cease its trading operations in the United States. This decision follows the bankruptcy filing of Genesis Global Holdco, DCG’s crypto lending company, earlier this year.
Why is Genesis Trading Ending its US Operations?
According to Bloomberg, a spokesperson for Genesis Trading stated that the company is winding down its US trading service due to “business reasons.” The decision was made voluntarily, and the company is working closely with regulatory authorities to ensure an orderly discontinuation of services. Despite earlier claims that the trading operation would continue as usual after the bankruptcy of its lending arm, Genesis Trading has now made the decision to shut down.
Clients have been informed via email that all trades must be settled by September 21 and any remaining open accounts will be closed by September 30. Genesis Trading, which launched the world’s first Bitcoin over-the-counter (OTC) trading desk in 2013, has grown to become one of the largest market participants in the industry. It provides capital and credit products to prominent digital asset projects, networks, and funds. The company has managed $116 billion in spot volume, held over $14 million in active loans, and served more than 1,000 institutional clients. It is licensed by the New York Department of Financial Services (NYDFS).
Coinbase Fills the Gap
While Genesis Trading and BlockFi, another major crypto lending firm, are exiting the institutional lending space, Coinbase has stepped up to fill the void. In a recent filing with the Securities and Exchange Commission (SEC), Coinbase revealed that it has raised $57 million to launch a platform for over-collateralized crypto lending. This new service allows the firm to receive crypto collateral from clients and offer secure loans to institutional clients, similar to traditional finance’s prime brokerages.
Coinbase’s new lending platform is distinct from its retail-oriented Lend service, which was cancelled prior to launch due to regulatory concerns from the SEC.
Regulatory Pressures on Crypto Firms
It’s worth noting that Genesis Trading and BlockFi are not the only crypto firms to have abandoned operations in the United States due to regulatory pressures. Companies such as Nexo and Bittrex have also made the decision to cease their US operations in the past year.
With Genesis Trading closing its US trading operations, Coinbase is taking the opportunity to expand its presence in the institutional lending space. As the regulatory landscape continues to evolve, it remains to be seen how other crypto firms will navigate the challenges presented by regulators in the United States.