Cryptocurrency over the counter (OTC) liquidity provider Paradigm is now offering its institutional clients a way to request quotes from many dealers at once without revealing either their identity or even if they want to buy or sell.
According to a Nov. 19 announcement, Paradigm’s newly launched multi-dealer RFQ (MDRFQ) trading tool then instantly executes the purchase or sale of the options and futures desired at the best price available. Paradigm works with many crypto derivative exchanges, including Deribit, Bit.com and the Chicago Mercantile Exchange
By simultaneously and anonymously—if desired—requesting both the best bid and offer prices available for a particular transaction, Paradigm eliminates manual negotiations and allows its large clients to make trades without “revealing their trade direction,” the company said.
“In October, traders on Paradigm got better-than-screen prices, saving an average of 2.4 ticks (12 bps) on their large and multi-leg order flow by connecting directly with dealers in the Paradigm network,” the company said
Paradigm claims to routinely account “for 20-30% of global cryptocurrency option flows” and that its all-time-high daily trading volume is $286 million, registered on Oct. 30.
The company’s head of sales and trading Michal Koonin said that the new feature is already popular among the users, noting that “68.9% of all RFQs last week were executed via the new MDRFQ feature, with 74.5% of those RFQs transacted on an anonymous basis.” He added:
Clients have been very happy with the improved speed and competitiveness of received quotes and the ability to remain anonymous, all of which have significantly improved the trading experience.”
Anonymity in finance? Normal with crypto
Automated anonymous OTC negotiations and settlements may feel new and surprising to those unacquainted with the cryptocurrency space. Still, reports by industry insiders reveal that the cryptocurrency space is still very much the wild west.
As Modern Consensus reported in early October, blockchain intelligence firm CipherTrace claimed in a recent report that 56% of all crypto firms “have weak or porous know-your-customer (KYC) processes, meaning money launderers can use” their services.
Furthermore, technology developments mean that even when regulators force centralized crypto firms to comply with KYC regulations—think BitMEX—there will most probably be automated services that nobody will be able to control.
For instance, at the end of October non-custodial peer-to-peer exchange Hodl Hodl launched an anonymous lending service that the company claims can circumvent the regulations thanks to its decentralization.