Digital asset market making becomes an institutional business
The trading firms that dominate equities and futures now anchor crypto liquidity, bringing tighter spreads and familiar market dynamics with them.
Jakub Żerdzicki via UnsplashLiquidity provision in digital assets has changed hands. The proprietary trading firms that dominate equities and listed derivatives now anchor order books across major crypto venues, and the market microstructure increasingly resembles the ones they came from.
The visible effects are benign: tighter spreads, deeper books, and less of the venue-to-venue price divergence that once defined the asset class. Institutional allocators cite execution quality as a solved problem in the liquid majors, a claim that would have been laughable a few years ago.
The subtler effects are imported too. Speed competition, exchange fee negotiations, and debates over market data pricing have all arrived on schedule, and venue economics are converging on the patterns familiar from traditional exchanges.
The frontier has moved to the long tail and to regulated derivatives, where liquidity remains thin and licensing determines who may compete. The firms that built compliant infrastructure early are, predictably, the ones setting terms.