This post is part of Consensus Magazine’s Trading Week, sponsored by CME. Dr. Bo Bai is the executive chairman and co-founder of MetaComp and the MetaVerse Green Exchange.
Last week, a jury of 12 found former FTX CEO Sam Bankman-Fried guilty on all seven fraud-related charges, bringing to a close months of industry navel-gazing. Following 2022’s slew of collapses and scandals, all owing to poor risk management, governance and oversight, the very fabric of the crypto industry has changed, leaving many to contemplate its future as a new cast of characters comes to the fore.
New, but also not so new: the very financial institutions that crypto initially sought to distance itself from now occupy the headlines. Financial giant Franklin Templeton fueled the flames for the tokenized real-world assets when it launched a tokenized money-market fund earlier this year while others, including Deutsche Bank and HSBC have signaled intent or have launched blockchain-based financial products in the market.
The rules of engagement are changing. “Institutional-grade” is the new norm. Investors are now more interested in tokenized equivalents of existing products than the previous allure of mechanisms such as yield farming, staking and more. Decentralized finance (DeFi), frankly, seems all but passé. So for those of us in the trading space, what does that actually mean?
Redefining institutional-grade
Previously, the concept of institutional-grade was a matter of product, rather than infrastructure — be it spot or margin trading capabilities, or even new contract types not previously seen for digital assets such as perpetual futures. After last year, it’s come to stand for something a little more pragmatic: safety.
In a post-FTX climate, the tides turned. Whether institutional or retail, it is now less about returns, guaranteed or otherwise, and more about whether an entity can be trusted. This is somewhat counterintuitive in an industry underpinned by blockchain, a technology that upholds trustlessness as a core tenet.
See also: Code vs. Values: The Crypto Twist on ‘Trust’ | Opinion
For bank-backed exchanges, trust is what draws in clients — trust in the brand, but also the existing regulatory and compliance frameworks associated with the exchange to their affiliations with financial…
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