As cryptocurrencies continue their momentum into the mainstream financial markets, more investors seek exposure to digital assets from their financial service providers. Integrating cryptocurrency capabilities onto brokerage platforms presents a timely opportunity for brokers to satisfy this growing customer demand, attract new demographics of users, and future-proof offerings in an increasingly competitive space.
Traditional brokerage platforms can tap into a massive new liquidity pool, unlock 24/7 settlement availability, expand internationally with borderless transactions, and position themselves as a true one-stop platform catering to both traditional and cryptocurrency assets. Ultimately, crypto technology integration allows brokers to increase revenue, cater to inevitable adoption trends, as well as expand your customer base by meeting modern investor expectations.
Read on as we explore the 8 compelling reasons why brokers are looking to integrate crypto onto their brokerage platform.
- New Liquidity Source And Increased Revenue
- Expand User Base Internationally
- 24/7 Availability And Faster Settlement
- Be The One-Stop Brokerage Platform
- Future-Proof Platform Offerings To Stay Competitive
- Inevitable Adoption In Crypto
- Attract Younger Demographic Of Crypto Investors
- Earn Untapped Yield From DeFi
New Liquidity Source And Increased Revenue
Sourcing fresh liquidity is an ongoing challenge for traditional brokers. With the rapid growth in market capitalization for cryptocurrency, along with trading volumes, and overall adoption, Brokers want exposure to this fast-expanding market as they seek new sources of revenue growth. Crypto holders represent a rapidly growing new liquidity source that brokers can tap into for boosting the brokerage platform's volume.
Expand User Base Internationally
Brokers face geographic constraints in accessing new markets and reaching emerging demographics like millennial and gen-z traders. Cross-border transaction and regulatory hurdles also hinder serving a global client base. This restricts the customer footprint for broker platforms. Crypto facilitates instant borderless transactions allowing brokers to global crypto trading volume.
24/7 Availability And Faster Settlement
Traditional assets have limited trading and settlement windows - requiring brokers to halt trading outside major market hours. Crypto market trading is 24/7 and blockchain transactions are instant. As such, brokers can unlock around-the-clock trading and settlement between traditional financial instruments and crypto assets, driving incremental volume without restrictive trading hours.
Be The One-Stop Brokerage Platform
Integrating crypto technology builds on the goal of brokers to be a one-stop platform for investors' trading and investing across various asset classes. As crypto represents an emerging new asset class, incorporating it aligns with many brokers' objective to provide investors a comprehensive suite of financial services under one roof.
Future-Proof Platform Offerings To Stay Competitive
Providing access to cryptocurrencies future-proofs a broker's platform as crypto and DeFi matures. As some traditional brokers such as Vantage Markets, eToro, WeBull, and Robinhood have started offering crypto access, there is increasing competitive pressure on other brokers to follow suit so they don't get left behind and lose customers. No one wants to be the broker that lacks the assets their competitors offer.
Inevitable Adoption In Crypto
Cryptocurrency is gaining mainstream momentum and has established itself as a sizable asset class. From retail traders to institutional powerhouses like Onyx by JP Morgan, Standard Chartered, and PayPal, financial players across the spectrum are embracing cryptocurrencies. As cryptocurrencies become more commonplace, investors increasingly expect and demand digital asset exposure from their financial providers. By integrating cryptocurrencies, brokers can satisfy surging investor demand in digital assets.
Attract Younger Demographic Of Crypto Investors
Integrating crypto helps attract millennial and Gen Z investors who hold crypto and are interested in new investment opportunities such as traditional financial products on brokerage platforms.
Earn Untapped Yield From DeFi
By opening the brokerage platform up to crypto, there will be more channels to earn interests on the crypto deposits. Brokers can explore the world of DeFi trading, lending, and staking, with the increased exposure to the world of cryptocurrencies.
That being said, integrating crypto into brokerage platforms is no easy task. It brings technological and operational complexity around crypto security, compliance, asset handling, and more. Many brokers lack the technical expertise and capabilities.
What if you had a partner focused solely on solving these pain points? That is where institutional crypto custody providers like Cobo steps in. We are globally trusted by over 500 institutions with billions in assets under custody, ISO 27001, SOC2 (Type 1 and Type 2)-certified, and licensed in 4 jurisdictions.
If you are a broker interested in integrating crypto onto your platforms, Cobo offers best-in-class products and services. Check out www.cobo.com or drop us an email at [email protected] to find out more.
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