A significant development on the crypto market front has taken place with Genesis Global Trading (GGT), a New York-based subsidiary of the esteemed Digital Currency Group, voluntarily deciding to suspend its crypto spot trading services starting from September 18. The firm has taken a proactive approach in coordinating the move with the critical regulatory authorities, such as the New York Department of Financial Services and the US Securities and Exchange Commission. While the motives behind this move aren’t explicitly spelled out, there’s a hint of business strategy playing a critical role.
Notably, GGT is a holder of multiple regulatory permissions, which allows it to specialize in over-the-counter market-making services in cryptocurrencies. Even though it’s bidding farewell to the spot trading feature, the firm reassures that derivative trading through its affiliate, GGC International Limited, won’t be affected.
The decision comes as no surprise if we take into account the evolving market conditions. The company’s second-quarter report uncovered the declining liquidity in the spot market, contrasting with an optimistic forecast of future growth in crypto volumes coming from derivatives. The company’s choice to focus on derivative trading while discontinuing spot trading services seems to be a calculated and strategic move aligning with these transformations.
Furthermore, it reflects traders’ evolving preferences. They are leaning more towards exchange-cleared avenues, distancing from over-the-counter undertakings. This change is indicative of companies adapting their business models in concurrence with the increasing scrutiny of the crypto industry by regulators.
While this change is significant, it becomes even more crucial considering the challenges faced by Digital Currency Group, GGT’s parent company. They had an arduous year, with the fallout of Genesis Global Holdco bankruptcy and legal woes of defaulting on a $630 million debt payment to Gemini. Despite these hitches, GGT managed to abstain from the disruptions and continue its services.
Hence, while it may cause a stir, the abolition of spot trading from GGT’s roster seems to be an isolated adjustment rather than a complete strategy overhaul. And it’s not just an isolated instance. This evolving strategy signifies the larger shifts underway in the crypto world. It primarily exhibits how the crypto industry is acclimatizing to the ever-mounting regulatory scrutiny, shifting business models, and market preferences therein.
Source: Cryptonews
