During the first years of their existence, cryptocurrencies were mostly of individual traders’ interest – large companies did not recognize them as worthy tools for investments. However, as time passed and crypto assets proved viability, institutions, and companies took a closer look at the crypto sector. Institutional adoption of crypto started in 2018 during the first global “crypto winter”. At the same time, institutions saw a lot of opportunities, while having more expertise to access and manage risks associated with crypto volatility.
In 2020 – 2021, crypto adoption ramped up with the Bitcoin’s price skyrocketing to its historical maximum. These changes spurred the emergence and development of institutional services provided by institutional trading platforms. Today the market offers numerous worthy options such as Binance, WhiteBIT, Coinbase, etc. In this article, we will explain what an institutional trading platform is and how to choose a proper one.
Institutional Crypto Exchanges
A trading platform is an institutional trading software used by traders and investors for buying and selling assets. This software usually belongs to an institutional trading exchange that acts as a middle layer between traders. When saying institutional crypto exchange we mean a centralized platform that provides institutional trading tools, security measures, risk-management tools, compliance, assistance, and other services to its clients. Many of the listed features are scrutinized when choosing the best trading platform. Let’s see how investors do that.
Choosing a Crypto Institutional Trading Exchange
Here are some crucial features to consider:
- Volume and liquidity. Given the high volatility of crypto assets, there must be sufficient liquidity to fulfill traders quickly and not lose money due to delays in execution. That’s why investors should choose a platform with assured liquidity and high trading volumes.
- Transaction costs. Investors should understand the fee structure before registering an institutional trading account. Every platform charges different commissions and it may also depend on the tool used.
- Protection. Traders, especially those operating large amounts, require safety. Look for a platform that ensures your funds are protected. Check out if it uses 2FA to protect funds against hacker attacks.
- Compliance. Institutions are always under scrutiny from regulations, so they should use platforms that adhere to the laws and regulations in the region they trade.
- Reputation. It’s the last but not least important factor to consider. Check out other users’ reviews on the platform, maybe they noticed some drawbacks or faced problems with withdrawals, etc.
Picking an institutional trading platform is not an easy task, especially when it comes to institutional trading. An investor should evaluate the platform’s liquidity, tools, and fees, and make sure it complies with regulations.
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