Kraken Exchange Acquires Service Provider for Institutional Investors
Cryptocurrency exchange Kraken has acquired Interchange, an accounting and portfolio reconciliation service provider for institutional cryptocurrency investors.
A press release published on July 31 outlines that the acquisition supports Kraken’s creation of an end-to-end crypto trading and reconciliation platform.
An arsenal of tools for institutional clients
As the release outlines, Interchange’s co-founders and crypto veterans Dan Held and Clark Moody have evolved Interchange to serve cryptocurrency hedge funds, asset managers and fund administrators, providing them with specialized tools to monitor and report their crypto holdings and optimize their portfolios.
The 60+ institutional clients using Interchange’s software include MG Stover — reportedly the world’s largest fund administrator for digital asset funds.
Kraken — which has apparently reported a triple-digit growth rate (%) in institutional clients year-on-year since 2014 — will combine Interchange’s tools with its existing platform, Cryptowatch, a multi-exchange charting, trading and portfolio-tracking service.
The combined tools from both Interchange and Cryptowatch will thus offer institutional clients products spanning historical and real-time data, advanced charting, multi-exchange trade execution, research and market insights, accounting and portfolio reconciliation tools, and cryptocurrency index products.
The evolving crypto hedge fund space
In an interview with Kraken — published to the exchange's blog on July 31 — Dan Held and Clark Moody gave their perspective on the development of institutional crypto investment.
Held — who has been involved in crypto for over seven years — said that in the aftermath of the 2017 initial coin offerings frenzy, crypto hedge funds have had to adjust their focus and “deepen their understanding of Bitcoin and blockchain fundamentals.”
“Many learned a hard lesson regarding diversification in an asset class that is highly correlated. The hedge funds that have survived the crypto winter are now more mature, sophisticated and process heavy,” he said.
Moody noted that funds are diversifying their strategies and allocation approaches, spurred by the need to seal a competitive edge in a 24/7 digital marketplace. He predicted that as more capital flows in from large-scale institutional players, the crypto space will see a host of new products, including advanced derivatives.
This June, fresh data from institutional crypto lender Genesis Capital revealed a major increase in cryptocurrency activity from institutional counter-parties, with volumes 2-3x higher than they were twelve months ago. Reporters argued that this institution-led momentum could well have contributed to Bitcoin’s 2019 price rally.