11.05.2021

Crypto Prime Broker Shows Continued Growth

  • Leading crypto prime broker delivered record levels of activity during Q3
  • Q3 activity exceeded full-year 2020, the best year in the company’s history
  • Through first nine months of 2021, Genesis completed nearly $200 billion in crypto transactions
  • Genesis remains largest crypto lender with cumulative loan originations exceeding $100 billion since inception

Genesis, a digital asset industry pioneer and digital currency prime brokerage, released its Q3 2021 Market Observations Report, which highlights major trends across institutional digital asset markets. The report shows that in a quarter marked by the accelerating march of traditional finance into crypto markets, a market rotation into Layer-1 (L1) tokens and growing institutional interest in DeFi, Genesis experienced growth across trading, lending and custody, delivering its strongest quarter to date. The report also shows that the third quarter centered on the recovery of market stability, as well as renewed risk-taking in the derivatives markets.

Highlights during the quarter across crypto lending, trading and custody include the following:

  • Loan originations reached $35.7 billion, up over 586% year-on-year and 40% vs Q2 2021.
  • Spot trading grew over 450% vs Q3 2020.
  • Derivatives notional volume traded was up over 12x year-on-year, and up almost 50% on the quarter.
  • Onboarded custody clients expanded by 47% vs Q2 2021, and the number of assets supported increased by 50%.

“The growth we saw this quarter across Genesis further highlights the strength of our prime services offering,” said Michael Moro, CEO of Genesis. “A growing number of institutional investors are looking for a comprehensive suite of crypto products and services, and Genesis is fast becoming a partner of choice.”

The Genesis Q3 2021 Market Observations Report provides a comprehensive look into key market activity through insights from the firm’s spot trading, derivatives trading, lending, custody, treasury and prime brokerage businesses. To read the full Q3 2021 Market Observations Report, click here.

Crypto Lending

In Q3, the Genesis lending desk originated $35.7 billion in new loans, up from $25.0 billion in Q2, marking a company record and solidifying Genesis’ position as the largest crypto lender in the industry. Cumulative originations surpassed $100 billion since the Genesis lending business launched in March 2018. Active loans outstanding rose 34% over the quarter to $11.1 billion from $8.3 billion in Q2. While BTC loans increased overall, the composition of the loan book continued to rotate. BTC loans accounted for 32.4% of outstanding loans, down from 42.3% at the end of Q2, while ETH loans increased to 32.0% of the total book, up from 27.9% in Q2.

Spot and Derivatives Trading

While BTC demand continued to trend downwards during the quarter, the desk weighting of BTC increased as anticipation of the listing of the first US BTC ETFs revived market interest. At the end of Q3, BTC accounted for approximately 61% of Genesis’ OTC trading activity, up from 47% in Q2. With rising adoption on DeFi platforms, Genesis also saw greater borrowing appetite in ETH from institutions to post as collateral or liquidity pairs across DeFi applications. Additionally, throughout Q3 L1 alternatives continued to attract more capital, resulting in the development of new decentralized applications. Many institutions explored yield opportunities across L1s, which often provided attractive rates for stablecoin and ETH/BTC pairs.

Whereas the second quarter’s swift deleveraging resulted in a peak-to-trough sell-off of over 50%, the third quarter centered on the return of market stability, and with that came renewed risk-taking in the derivatives markets. Listed options open interest began the quarter at $5 billion and more than doubled to above $10 billion by the end of September. Genesis saw a Q3 wave of derivatives trading activity that culminated in over $12.7 billion notional in bilateral OTC, negotiated block trade and exchange-traded volumes, representing approximately 50% quarter-on-quarter growth. This was a new record for the derivatives desk, surpassing Genesis’ strong Q1 and reflecting a resurgence of institutional activity in the market, alongside a broadening of Genesis’ counterparty base.

Custody

Genesis Custody also had a strong quarter with a 47% increase in the number of customers onboarded during Q3 vs Q2. Genesis facilitated $450 million in transactions and added seven new supported assets: SOL, BAT, GRT, MKR, YFI, REN and LPT.

The growth in custody transactions and support assets was a direct result of client feedback. Hedge funds, family offices, venture capital firms and corporates have demanded more than just reliable custody; they want bespoke solutions and more productivity from their custodied assets. Genesis’ integrated lending and trading desk enables the crypto prime broker to offer expanded coverage across supported assets and innovative services such as staking ZEN for clients, which Genesis began in Q3.

Derar Islim, Chief Operating Officer of Genesis, added, “As evidenced by the execution of the first two trades ever printed in the Bitcoin BTIC product listed on CME, we continue to provide innovative ways for our clients to access the asset class and we are well-positioned to further build upon this momentum in Q4 and beyond.”

Source: Genesis

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