Hong Kong-based cryptocurrency exchange Coinsuper is reportedly shifting its focus from retail traders to institutional investors. This is the latest example of how regulations and trading volumes moving to OTC platforms are impacting the business strategies of crypto exchanges.
Coinsuper Exchange Pivots Focus
Coinsuper, a Hong Kong-based cryptocurrency exchange which claims to have one million registered users, is reportedly refocusing its business on attracting and serving institutional investors. The company’s engineers in mainland China are said to be re-tailoring the platform to fit institutional clients’ needs such as portfolio management and compliance with reporting requirements. Management also hopes to be granted a license by the Hong Kong Securities and Futures Commission (SFC) following its “sandbox” period.
“Institutional clients are mindful of security breaches and we have learned a lot from the market. If our infrastructure is steady and robust, we would naturally entice trading volume. We are not worried about declines in trading volume too much,” Karen Chen Qing, CEO of Coinsuper, told the South China Morning Post. She also explained that in comparison to retail traders professional investors have more knowledge and financial capability to bear the volatility of trading virtual assets.
Market Shifting to Institutional Investors
The institutional sector has attracted the attention of cryptocurrency trading venues more and more as retail spot volumes declined due to the persistent bear market. Many exchanges have adapted by launching over-the-counter (OTC) desks and other services dedicated to big players. Regulations also play a part in driving businesses to the institutional market, especially for ventures located in Hong Kong such as Coinsuper.
In November 2018, the SFC introduced new rules which many observers predicted would limit cryptocurrency trading to institutional investors. Portfolio managers and funds that plan to invest more than 10 percent of their portfolios in virtual assets are required to obtain a license which means only qualified institutional investors with at least HK$8 million ($1 million) will be allowed to invest in virtual asset portfolios.