Nickel Digital calls for greater utilization of off-exchange settlements in crypto
Nickel Digital Asset Management, a UK-based investment management firm, states that cryptocurrency exchanges can step up in their bid to reduce; fraud and counterparty risks. Below are some key points:
- Nickel Digital is calling for heightened integration of off-exchange settlements in the crypto sphere, pointing out that these solutions can dramatically decrease the risk of fraud and bankruptcy.
- An analysis of the cryptocurrency market reveals that 63% of daily trading volume is concentrated on seven major exchanges, all of which have implemented OES solutions.
- When FTX imploded, platforms saw the necessity of integrating the solution to mitigate counterparty risk.
To enable crypto to reach its potential, the UK-based hedge fund manager suggests that more crypto exchanges join a select group of platforms. Already linked with Off Exchange Settlement solutions.
Nickel Digital also points out that OES has the potential to offer more efficient and cost-effective solutions. Aside from reducing the risk of fraud, bankruptcy, and counterparty risk, using off-exchange settlement technologies could also facilitate a faster and simpler process for traders.
The hedge fund manager believes that Off Exchange Settlement will be an integral part of the cryptocurrency industry. As it is a key factor in mitigating counterparty risk and encouraging participation.
With its advanced features and potential to reduce financial risks. OES could be the answer to crypto liquidity issues and make trading safer for everyone involved.
Off-exchange settlements enabled by OES technology can not only drastically reduce counterparty risk. But also aid market participants in shielding investors from catastrophic collapses such as that of FTX.
Additionally, it offers distinct advantages rooted in the decentralization and transparency associated with cryptocurrency tools like on-chain visibility.
Anatoly Crachilov, CEO of Nickel Digital, notes in a statement:
“OES is the ideal approach to reducing counterparty risks in the crypto space, doing away with the requirement for investors to store their funds at trading locations. We are firmly convinced of this fact.”
About 63% of crypto daily volume on 7 major exchanges utilize OES
This is a rather high number compared to the amount of OES usage on traditional exchanges, which typically stands at around 20%. While OES offers many advantages in terms of minimizing risk, liquidity is still a major concern.
One of the biggest challenges for OES is that it has yet to be fully integrated into the existing market infrastructure. However, Nickel Digital has identified OES as a key element in the growth and development of the cryptocurrency market.
By March 15th, 2023, Nickel has already established an association with seven of the top twenty crypto exchanges globally. Brought to life by Goldman Sachs, JPMorgan and Bankers Trust alumni, Nickel is Europe’s groundbreaking digital asset investment platform.
As another platform is incorporating the solution. OES-supported systems are likely to experience a surge in their daily trading volume from 63% up to nearly 70%.
Nickel’s research found that nearly 11% of all transactions take place on a few prominent exchanges, such as Coinbase, Kraken and Bitstamp. These sites are registered in the US and European Union and provide users with more secure trading conditions.
How does the OES flow work?
The OES system allows buyers and sellers to match orders in a secure, off-exchange environment. This is a much more secure option that eliminates the need for third parties to handle customer funds or execute trades.
The transactions are processed almost instantly, without having to wait for long periods before they’re confirmed on the blockchain.
Nickel Digital suggests a seamless OES flow is best achieved when four components – an exchange, a custodian, a reliable third-party mediator and the trader (the exchange’s client) – come together in harmony.
This can provide users with the assurance of quality dispute resolution mechanisms should any issues arise.
Summary
Nickel Digital calls for greater utilization of off-exchange settlements (OES) in the cryptocurrency space. This can provide users with a seamless and almost instantaneous transaction process, as well as reliable dispute-resolution mechanisms.
