The digital asset services company Bequant has received two “basic” approvals in Malta, which will ultimately lead to the company being a licensed prime broker and a crypto exchange in Europe.
“The prime brokerage offering has been our anchor product since our launch,” said George Zarya, CEO of Bequant, in an interview. “We tailored it for quants, props dealers, and arbitrageurs who are prime brokers’ clients. Prime brokers minimize the counterparty risk on stock exchanges and enable a high degree of capital efficiency. “
After Coinbase took over the Crypto Prime broker Tagomi in May, Coinbase was able to raise at least 425 million US dollars for the blockbuster Bitcoin purchase from MicroStrategy through its Coinbase Prime service. This is the commitment to establishing a world class brokerage arm in times of heightened institutional interest.
Prime Brokers are intermediaries for the financing and trading of institutional investors with deep pockets. While the digital assets space doesn’t currently offer many prime broker options, several crypto firms including Coinbase, BitGo, and Genesis Trading announced their plans to build prime brokerage wings this year.
Bequant’s world-class brokerage services include capital introduction, fund management, stock lending, direct market access on multiple exchanges, custody, collateral management, leveraged trade execution, over-the-counter block trading, risk management and smart order routing.
As of late August 2018, the company has been provisionally operating its prime brokerage and crypto exchange services under the Virtual Financial Assets Act, while it is in close talks with the Malta Financial Services Authority (MFSA), Zarya said.
With the licenses, Bequant can continue to operate its crypto exchange and offer its customers first-class broker services.
Overall, Bequant required both permits to hold reserves of € 730,000 and to have policies and procedures reviewed by the Malta Financial Services Authority, added Zarya.
After Bequant has already gone through this rigor, it will be relatively easy to apply for other securities licenses in Malta in the future, Zarya said, which may allow the company to deal with tokenized securities and derivatives.
“The prime brokerage product has been our anchor since we launched it,” said Zarya. “In the new year, the most important milestone for the industry will be increased scrutiny of customer exchanges as the market becomes more institutional.”
The company is now on 14 exchanges and five OTC counters as sources of liquidity, up from 11 sources in August.