Crypto.com says operating in-house trading team, market maker not ‘controversial’
Crypto.com reportedly has an internal trading team and acts as a market maker on its platform, highlighting potential conflicts of interest. financial times.
Market makers provide liquidity, allowing users to buy and sell quickly at prevailing market prices. It is a function that reduces price fluctuation risk and enables efficient trading.
Earlier this month, Securities and Exchange Commission Chairman Gary Gensler criticized crypto exchanges for often having mixed functions.he Said“In conventional finance, you can’t imagine the New York Stock Exchange running hedge funds and creating a market.”
Crypto.com defended its position by saying that internal market-making is “not a controversial practice.”
conflict of interest
The exchange protects the interests of its customers, while the trading team aims to make a profit. If an exchange has its own market makers or traders, they run the risk of putting their own interests ahead of those of other parties.
For example, a user’s order may be executed at a price worse than the exchange’s trading desk. Additionally, exchanges have access to market data such as order flow and trading volume, which can be used to give them an unfair advantage over other traders.
More importantly, by controlling trading platforms and their trading desks, exchanges may be able to manipulate the market by artificially inflating trading volumes or creating misleading market trends. That’s it.
Crypto.com Says Nothing to Worry About
Crypto.com told the FT that its internal market makers would be treated “exactly the same” as the exchange’s third-party market makers.
Regarding the trading team, the company said that in order for Crypto.com to remain “risk-neutral”, traders are hedging their positions on various platforms, not relying on the trading desk as a significant source of revenue and not relying on it. Trading apps, he added, were mostly from retail.
Anonymous sources cited by the FT allege that Crypto.com’s trading desk is primarily intended to generate funds, not facilitate trades, and the existence of an internal trading team and in-house market maker operations. He asked the employee to deny it.
Crypto.com said it did not ask staff to lie to other market participants.
The company plans to close its institutional exchanges in the country this week, following the tight regulatory climate in the United States.
A Crypto.com post says that it operates an in-house trading team and first appeared on CryptoSlate as a market maker “not controversial.”
