This November, it will be 11 years since the Bitcoin White Paper was sent to a tight-knit community of cryptographers by Satoshi Nakamoto. The main idea was to introduce a system that was better than the banks, which a year earlier had gone through a massive financial crisis. On the white papers anniversary, an Irish man named Campbell Adams is bringing bitcoin to the banks.
Adams has a wide-range background in FX trading and sales. He worked at EBS as regional product manager FX and commodities. It was only in May 2010 that he decided to found and manage FX Pure which later became PARFX Ltd. PARFX is a foreign exchange platform that offers a different kind of trading experience. One of the biggest problems with trading today, according to many, is high-frequency traders. These arbitrage players use lightning speed to “steel” increments and cents out of real buyers and sellers. ParFX put in place speed bumps, that deterred these kinds of players on the platform. The result was a better trading experience for the banks and institutions.
How Pure Digital came to be
In 2018, Adams decided to create something new. Keeping with the PARFX concept, he launched Pure Digital Markets. Primarily a digital asset market for price origination, discovery and trading – applying the same transparency and level trading playing field as that successfully deployed into the FX trading market.
“The Crypto trading ecology is challenging, particularly for institutional-grade professional market participants so introducing a proven FX infrastructure into the nascent crypto world seems a natural and productive evolution in that space. “
His strategic advisor and director of the board, Jan Ivar Strømme decided to join the team in 2018. Strømme, has experience in e-FX Sales/Business Development, liquidity provision, and trading. Serving at major FX exchanges (EBS/ICAP, Thomson Reuters/FXall), GSA Capital /XTX Markets and DNB at the very cutting edge of High-Frequency Trading, Liquidity, and Technology for the banking and hedge fund industry. He was the Global Head of FX Business Development at GSA Capital, creating an industry-leading solution to extend and build from scratch a new client-facing market making and liquidity provision business, enhancing buy-side firm’s ability to trade, hedge and interact with the leading non-bank FX liquidity providers. Recently, Strømme established Alphaplate, a proprietary trading crypto entity.
Combing their extensive backgrounds, they have an edge going into the crypto market. They know how to build a trading platform, they now the institutions and trading clients, and they know what is crucial for building a healthy and robust market.
What is the point of making an interbank market for crypto?
Bitcoin adoption is on the rise all over the world. Trading volumes are increasing, and the number of active addresses is growing. This year we have seen turnover records being set on the Chicago Mercantile Exchange, and the launch of ICE owned BAKKT has brought new energy into the market. Even though the initial trading volumes have been low on BAKKT, there are also rumors of an impending launch of a Chinese Digital Currency. Let us not forget about the flurry of DeFi product launches, and institutions are increasingly asking the right questions, ‘how do we get on board?’
At the same time, central banks are pursuing an experimental monetary policy with negative interest rates and printing a record amount of money. This is an effort to stimulate the economy. The result is that there is more fiat in the system than any other time in history. Bitcoin, on the other hand, cannot be inflated and will see new the inflow of new bitcoins halving next year. The rewards to miners will be cut in half. So less bitcoin, more fiat.
Some will point to Bitcoin for having the same characteristics as gold as a financial instrument, scarcity. In addition, in a fragile economy and with more countries introducing currency controls. Argentina, Venezuela, Hong Kong, and China have all tighten their buckles around private capital this year. There will be demand for something of value not derived from traditional money. Something that is uncorrelated with dollars or euro, is controlled by each owner and can be freely transferred over any communication medium be it the Internet, satellite or radio.
Pure Digital is on a mission
Pure Digital is on a mission to build a market that gives banks and institutions access to safe and fast crypto trading with other grade institutions. They are doing this because they know that the only way for these players to join the crypto market, is for them to replicate the business model they have always had with other banking products. Building this bridge will at the end of the day, give better onboarding opportunities and safer buying experience for retail investors. It will also help grow fund businesses, who can now trade physical bitcoins at their prime broker with their existing credit lines.
It should not be surprising that the demand from investors, institutions, and banks are growing fast. The problem is that there are not many good options for them today. There are many new exchanges and derivatives products launching this year, but not for banks.
Banks and institutions don’t put up collateral at an obscure exchange established in a close to non-taxable jurisdiction. These exchanges, outside of regulatory approval, are only for retail clients with huge risk appetite. Banks need to trade with other banks and institutions, and most important: utilize existing credit lines.
If a bank offers Bitcoin to their customer, they need an interbank market to offset their risk or positions. This is in the same way, they trade interest rates, bonds, stocks, and fiat. Pure wants to build that interbank market for crypto transactions
They will be launching this inter-market being launch in the first Q of 2020.