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25/02/25
101
Citadel Securities Eyes Crypto Market Shift as Liquidity Provider
Citadel Securities is reportedly exploring opportunities to act as a liquidity provider for prominent cryptocurrency exchanges, marking a significant shift from its previously cautious stance on retail crypto trading. The firm is evaluating partnerships with major players in the industry, including Binance, Coinbase, and Crypto.com, as part of its plan to establish market-making teams outside the United States.
This move comes amid expectations of a market resurgence following recent political developments. The company’s potential engagement in this area will largely depend on the evolving regulatory landscape in the U.S. over the coming months. If the regulations become clearer, Citadel is poised to offer the liquidity needed for transactions involving cryptocurrencies, similar to its operations in traditional asset classes.
Historically, Citadel Securities had been hesitant to participate in the crypto market due to the absence of comprehensive regulations in the United States. However, recent indications from government officials to position the U.S. as a hub for cryptocurrency innovation may have rekindled the firm’s interest in the sector. While Citadel had not fully disengaged from crypto in recent years, it notably collaborated with major brokerage firms like Charles Schwab and Fidelity Investments to establish EDX Markets, an institution-focused crypto exchange launched in June 2023.
Citadel has been embroiled in controversies, including a partnership with Terraform Labs prior to its collapse. There were allegations from the former CEO of Terraform, who suggested that Citadel’s trading activities contributed to the instability of the TerraClassicUSD (USTC) stablecoin. Citadel Securities contended that its minimal involvement in transactions could not have caused such issues.
Additionally, Citadel has attracted considerable investment from crypto-focused venture capital firms, such as Sequoia Capital and Paradigm, which collectively invested $1.15 billion in early 2022. Founded in 1990 by Ken Griffin, Citadel operates one of the largest hedge funds globally, managing over $63 billion in assets and serving a vast array of institutional clients.
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