Alexander Kravets is CEO of Symbridge Holdings LLC, the digital asset trading ecosystem built specifically for traders. He is an accomplished leader who has built a career as a trader, co-founder, and CEO of several trading-based ecosystems.
Russ Alan Prince: Tell me about Symbridge and what you are looking to accomplish in the digital asset space.
Alexander Kravets: Symbridge Holdings LLC is headquartered in Greenwich, Connecticut, and is comprised of Symbridge LLC, which is licensed by state-level Money Transmitter Licenses (MTLs), and Symbridge Capital LLC, which is a Finra member broker-dealer authorized to operate an alternative trading system.
We're looking to change the way digital assets trade by facilitating a more white-glove, institutional experience for entrants to the space. We are also looking to provide 24/7 spot trading of physically delivered commodities, including precious metals, that don't currently have liquid markets like platinum, palladium, cobalt, nickel, and others. On the broker-dealer side, the team is looking into various digital asset securities offerings to ease the barrier of entry for institutions and facilitate secondary trading. What sets us apart is our institutional and regulatory focus.
Prince: Who is the target audience that Symbridge is trying to reach through its digital asset spot exchange?
Kravets: For the spot exchange, the audience is active traders in the space, including hedge funds and institutions looking to purchase crypto for the first time. It's an active, accredited investor client that wants another venue for trading liquid digital assets, and for trading digital assets in a way that's easy and personal-approach-based, rather than exchange-based. Somebody who wants to call their rep and see what happened to their order.
Essentially, our customers are participants who welcome more of a white-glove approach to facilitating crypto trading, as well as entrants into the space who want to trade digital assets representing physical commodities that aren’t currently widely traded.
A lot of what we are doing at Symbridge is developing new markets, which is exciting. For example, we're setting up spot trading for Palladium, which is currently not really done outside the Chicago Mercantile Exchange. And this is just the beginning. The opportunities for innovation in this space are endless. So, again, our ideal client is really anyone who is institutionally focused, who trades crypto, who wants to trade metals, and who needs a high-frequency trading setup with a white-glove approach.
Prince: Are there certain digital assets that you have launched already or plan to launch later this year? And what is their significance?
Kravets: We started launching Bitcoin, Ethereum, Litecoin, USDC, as well as a Palladium USD pair. And we're looking to expand that offering to additional digital assets and additional metals as they become available.
We're excited about adding additional assets to our exchange because we believe the liquidity is going to be excellent, which will present many trading opportunities, especially on the commodity side, because those markets are still very much in development and very much in demand. And there's been a tremendous price appreciation for commodities, especially rare metals. We think that the market demand is robust. It's a cool and exciting place to be.
Prince: And what do you believe has impacted the digital asset space the most this past year and what is next on the horizon?
Kravets: There have been a lot of developments as far as institutional asset allocation. You know, we've seen VC and private investments increase 700% between 2020 and 2021, to $25 billion. The institutional share of decentralized finance trading volumes increased from 10% to over 60%.
Today, 47% of traditional hedge fund managers, which represent about $180 billion in AUM, are looking at investing in crypto. Among institutional investors in the U.S., 36% are currently invested and six out of 10 believe that digital assets have a place in their investment portfolios.
In a major milestone for our industry, the first U.S. bitcoin futures exchange-traded fund (ETF) started trading in October. This was eight years after it was first filed and is another signal that institutional adoption will only continue to expand.
At Symbridge, we're at the forefront of that. We will also facilitate the initial issuance and trading of digital asset securities through Symbridge Capital LLC, which is, in our view, the next step as far as the regulatory climate is concerned. So far, we’ve seen governments taking two entirely different approaches. China banned everything because it threatens their digital hegemony in the yuan, while El Salvador became the first country in the world to formally accept Bitcoin as legal tender.
According to a report from PWC, Bitcoin as a legal tender brings new business opportunities, not only in El Salvador but globally. According to the report, El Salvador’s move could also result in a domino effect that may lead other countries to adopt Bitcoin as a legal tender, as well.
In the U.S., you've seen the SEC become more and more involved, investigating and settling with more issuers and trading platforms in the space. The industry saw around $42 million in fines in 2020 and $560 million in 2021. Around the world, more than 50 countries are piloting, developing, or researching Central Bank Digital Currencies.
The recent executive order from President Biden told us which agencies are going to be participating in the ongoing development of regulations in the US We look forward to the coming developments. For these reasons, we believe it's the right space to seize the opportunity. And having a regulatory-forward approach is the right approach as the institutional market develops in the next couple of years.
Russ Alan Prince is the executive director of Private Wealth magazine and one of the leading authorities in the private wealth industry. He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals. Connect with him on LinkedIn.com.