Cryptocurrency-focused financial firm Apifiny has been granted a broker-dealer license from the U.S. Financial Industry Regulatory Authority (FINRA), according to an announcement Thursday.
Apifiny Prime, the trading arm of Apifiny (pronounced the same as “epiphany”), joins a select group of crypto companies such as Coinbase, Gemini, eToro and Circle in holding a FINRA broker-dealer license.
Slowly but surely, institutional-grade infrastructure is being built to connect the global cryptocurrency industry. New York-based Apifiny is building a kind of crypto conglomerate involving trading, market-making and bitcoin mining.
“A broker-dealer license will allow us to bridge the traditional financial market with the crypto market,” said Apifiny CEO Haohan Xu. “As a broker-dealer, we are able to offer securities to our clients, such as closed-end funds. That could be a fund that tracks a basket of crypto or a fund that tracks the performance of a sub-sector of crypto like DeFi (decentralized finance).”
Getting hold of a license from FINRA was a long and involved process, said Bob Morris, Apifiny’s chief compliance officer.
“FINRA looked into our background and our large footprint in the digital asset business,” Morris said in an interview. “They tread very carefully when it comes to crypto, and we had to provide a lot of due diligence. It was a yearlong process, and of course, COVID-19 didn’t help matters.”
Rise of prime brokerage
For the crypto sector to recreate the all-in-one white glove services institutional investors expect in the traditional world has been a goal of firms like Coinbase, Genesis and BitGo, but Xu said Apifiny’s prime brokerage service is mostly focused on trade execution.
Apifiny connects professional traders with 40-odd global exchanges to search the best execution prices, the company said. It has recently added Crypto.com, Huobi Global, OKEx, Kucoin, AscendEX, HBTC and Blockchain.com as trading venues.
“One of the biggest problems in the crypto space is around price discovery and liquidity,” Xu said, adding:
“Bitcoin may be more global in nature than Apple stock or even USD, but it's traded in a very localized way with regional exchanges dominating their respective markets, creating many isolated liquidity pools. This has prevented institutions from getting involved and is a problem we are helping to solve.”