If the past 12 months in the world of digital assets have shown us anything, it’s that components from the traditional finance world are essential for a new market looking to gain the trust of institutional investors.
The wonderment and potential of cryptocurrency as a concept remains a powerful lure for traditional market participants, but familiarity with regards to market infrastructure, asset safety and compliance are paramount for this evolution as we step into 2023.
The team at Digital Prime Technologies are looking to do just that, with their product suite which allows banks and broker-dealers to enter the digital asset space with robust and fully customisable services suited to their business and compliance needs.
“It’s an asset class that looks different compared to traditional finance,” says James Runnels, co-founder & CEO at Digital Prime Technologies. “Traditional asset classes were established by institutional participants, whereas digital assets took the opposite approach. Originally gained traction through retail, digital assets have now made migration to traditional finance.
“We feel that there’s a tremendous opportunity right now to come into the space with our technology, deploy it to all the traditional players and really let them utilise best practices and help clean up the space and take it to the next level, and we’re excited to be part of that.”
Through its software platform, Digital Prime Technologies enables its clients to quickly and easily deploy a full suite of prime brokerage solutions. The white label offering means prime brokers can take the technology and offer a full suite of prime services and digital assets to their clients with their logo, their balance sheet and their relationships. Through the service,
clients gain the ability to deliver financing, execution, settlement and access to custody of digital assets without having to setup and maintain all of the counterparties and technology.
A secondary product – Institutional Solutions – is a ‘slimmed down version’ of the prime solutions product, geared towards execution-only broker dealers and broker-dealers which offer primarily trading services and execution to their institutional clients and do not custody client assets.
“We took a novel approach back in 2019 where compliance, regulation and best practices were important to us, not only in what we embedded in our software but also our corporate ethos,” adds Runnels.
“Our goal was to build a robust tech stack that would allow banks, and broker-dealers the ability to offer a full suite of prime brokerage solutions in digital assets, on a white-label basis to their institutional clients.
“When we talk about compliance and regulations, all of our technology is embedded with best practices and regulations that govern traditional securities, so the same way a prime broker treats Apple and Facebook is the same way with our technology they can treat Bitcoin, Ethereum and any other digital asset.”
Digital Prime Technologies has a familiar feel about it for the traditional finance world. With a team stemming from the prime brokerage world, System and Organization Controls (SOC) accreditation, along with a FINRA membership and pending NFA application which allows DLCC Prime, a wholly owned subsidiary of Digital Prime Technologies, to operate as a regulated broker-dealer in the rapidly changing digital securities and commodities sector.
Digital Prime’s upcoming launch of a dealer-to-dealer lending platform is being met with broad excitement from both traditional finance and digitally native institutions. The platform is called Tokenet, led by former BAML, UBS, and Credit Suisse executive and securities financing veteran Courtney Campbell.
Carrying a feel of traditional lending and financing platforms, the service facilitates secure, efficient lending of digital assets. The user-friendly dealer-to-dealer platform allows institutions to seamlessly borrow and lend digital assets in a more transparent, automated fashion.
“I’ve spent my career in securities lending,” says Campbell, “and moving into the digital space, I noticed the way things were done differed from the best practices of traditional finance. The space seemed to lack the tools and processes to effectively view and manage lending risk.
“When the opportunity presented itself to join Digital Prime and spearhead the launch of Tokenet, I jumped at the chance. It’s a fully automated dealer-to-dealer lending platform addresses the issues the industry experienced in 2022.”
Tokenet is multi-custodian and supports multi-collateral, and has been built with the feedback from bulge bracket and digital native participants through an industry working group. The platform allows users to efficiently enter the digital asset lending space with enterprise- grade technology built on best practices, which Runnels places as the core DNA of their organisation and product suite.
Some of the features include workflow automation, loan lifecycle management, counterparty exposure monitoring, robust reporting suite, collateral management and chat connectivity.
Market participants can access real-time borrow/lend liquidity to enhance their execution/prime brokerage offering and facilitate matched book trades.
Digital Prime Technologies offers a range of solutions and features, but the firm’s core principles are fairly simple: deliver a product that embraces best practices, provides accountability and mitigates risk. Digital Prime Technologies delivers banks and broker-dealers a robust and fully customizable, white-label prime services suite tailored to their business and compliance needs. The firm is led by a Board and a team full of industry experts – the former of which contains traditional prime brokerage and capital markets veterans Bob Sherry, Glen Garofalo, Mike Hamill, Mark Spencer and advisor Jason Emerson.