How Wall Street prime brokers could ignite crypto's largest expansion yet
The Scoop's host Frank Chaparro was joined by LMAX Group CEO David Mercer.
In this episode, Chaparro and Mercer discussed the accelerating institutional adoption of crypto, with major banks entering the market and driving stability, maturity, and significant capital inflows. They also explored how improved interoperability between tradfi and crypto could increase adoption by enabling more seamless asset movement between the two ecosystems.
OUTLINE
00:00 Introduction
02:43 Bullish vs Bearish narratives
06:23 Improving regulatory environment
09:24 This ain’t mania
14:54 Competent credit offering
18:55 The necessary infrastructure
24:04 Capitalising on future growth
33:35 Good tech solutions will win
35:19 Conclusion
GUEST LINKS
David Mercer - https://www.linkedin.com/in/mercerdavid/
David Mercer on X - https://x.com/mercerdavid
LMAX Group - https://www.lmax.com/
LMAX Group on X - https://x.com/LMAX
LMAX CEO: It's time for crypto to embrace regulation
David Mercer is the CEO of LMAX Group — a leading operator of institutional execution venues for FX and crypto trading.
In this episode, Mercer makes the case that embracing regulation is the only way for the crypto industry to mature beyond its "tiny" role in global markets.
During this episode, Chaparro and Mercer also discuss:
Why bitcoin dominance has been increasing
Post-SEN/Signet opportunities
Where markets go from here
This episode is brought to you by our sponsors Railgun, and Flare Network
About Railgun
Railgun is a private DeFi solution on Ethereum, BSC, Arbitrum and Polygon. Shield any ERC-20 token and any NFT into a Private Balance and let Railgun’s zero-knowledge cryptography encrypt your address, balance and transaction history. You can also bring privacy to your project with Railgun SDK, and be sure to check out Railgun with partner project Railway Wallet, also available on iOS and Android. Visit Railgun.org to find out more.
About Flare
Flare is an EVM-based Layer 1 blockchain designed to allow developers to build applications that can use data from other blockchains and the internet. By providing decentralized access to a wide variety of high-integrity data from other blockchains and the internet, Flare enables new use cases and monetization models. Build better and connect everything at Flare.Network.
LMAX's CEO breaks down the real impact of the U.K. crypto derivatives ban
The ban will take effect in January of next year, affecting crypto brokers, investment platforms, financial advisers and, of course, derivatives exchanges. But, David Mercer, CEO of LMAX Group, said what the ban really does is effectively halve the leverage. The FCA had already limited leverage to retail customers to two to one, now it's one to one.
"You've banned derivatives, but actually you've just halved leverage. It's one to one rather than two to one. That's all that's really happened," said Mercer. "What they're saying to everyone, you can own crypto assets you just can't own it on leverage. "
Still, Mercer said there is a duty in capital markets to protect retail investors and firms have a duty of care. LMAX Group is a regulated broker in the U.K. trading mostly spot, but clients still pass suitability tests indicating their understanding of the product. Working with regulators, even when you disagree with them — and Mercer said he does disagree with the ban — is key.
Mercer laid out why he thinks the FCA took such an aggressive approach on this issue as well as its implications on this episode of The Scoop. He also touched on:
Why normal corporate firms are beginning to set aside part of their balance sheets to bitcoin, and why Mercer says it's inevitable that bigger traditional funds begin allocating portions of their portfolio to bitcoin
How the market responded to regulator cases against Bitmex
The implications of the FCA ban and how the regulator's influence might change by ignoring crypto stakeholders
Why he thinks a significant bank will move into the marketplace in 2021 and what that will do for crypto.
An FX exchange veteran explains growing a crypto exchange and weathering the Covid-19 storm
Institutional crypto exchange LMAX Digital closed out its second year by 10x-ing its trade volumes, trading $75 billion worth of crypto in the past 12 months, the firm revealed exclusively to The Block.
Since its launch two years ago, the firm has facilitated $85 billion in trades, according to a Tuesday press release. Last year's monthly high was $8.6 billion traded in June of 2019, and that month saw the firm's daily record high on June 27, when $1.25 billion was traded on the exchange.
CEO of LMAX Group David Mercer said the firm has become the primary price discovery venue, having grown to command a sizable portion of the spot cryptocurrency market. Still, the firm's growth has stagnated recently and the size of its market is still dwarfed by retail-aimed exchanges like Binance and Coinbase.
Now, with two years of growth under its belt, the firm is looking to expand its reach. Mercer told The Block that the firm is looking to add its trade and market data to more leading market reference indices, as well as expand its product portfolio with the growth of the asset class.
In a recently recorded episode of The Scoop, Mercer discussed the firm's recent growth and what it's been like to operate a digital asset exchange in the midst of the ongoing financial and health crisis. The Block's Frank Chaparro and Mercer also explore:
How the firm coped with rising volatility and maintained liquidity on its venue in the midst of whipsawing crypto markets
The differences between how traditional markets have held up during the COVID-19 crisis relative to crypto
Why LMAX needs more asset managers, fund managers to get involved in crypto for it to go head to head with retail exchanges
What traditional markets can learn from crypto
Why banks may not care about crypto yet, but their customers are asking questions
This episode of The Scoop is brought to you by Bitstamp, the original global cryptocurrency exchange. Since 2011, Bitstamp has been a cornerstone of the industry, earning the trust of over four million individuals and top financial institutions looking for a reliable trading venue. Whether you’re trading on our web platform, mobile app or industry-leading APIs, Bitstamp gives you the professional-grade tools you need to execute your strategy. Download the Bitstamp app or visit Bitstamp.net/Pro to learn more and start trading today!
A conversation with David Mercer, CEO of LMAX Exchange Group that operates LMAX Digital
David Mercer has been building out LMAX Digital, a UK-based institutional exchange venue, which recently clocked in $1 billion in volumes in one trading day. The firm counts dozens of banks and trading firms as its clients. Mercer joins The Scoop with Frank Chaparro and Ryan Todd at the Crypto Evolved event in New York City to talk about LMAX's growth, the 3 things keeping institutions from diving into the nascent market, and what it is like playing Rugby on the North Pole.
Show transcript and notes available on The Block.