jakiro
Jessy, bitchain vision
On February 25, Castle Securities will enter the crypto industry and become a liquidity provider for exchanges such as Coinbase and Binance.
Castle Securities is the largest market maker on the New York Stock Exchange, with business in more than 50 countries. It handles about 23% of retail stock transactions in the United States, and is known as the “shadow exchange of Wall Street.”The institution is good at using high-frequency trading and data analysis to improve market liquidity and trading efficiency, especially in volatile markets.
Castle Securities entered the cryptocurrency industry, based on its judgment on US cryptocurrency regulation, believes that Trump’s coming to power will bring about the prosperity of cryptocurrency.It is reported that in the early stage, it will avoid US regulatory uncertainty and give priority to setting up teams overseas.
The entry of Castle Securities also marks the gradual progress of the crypto industry towards compliance, and more mainstream financial institutions have entered the market. Although it has squeezed out the original market maker market in the currency circle, it also gives retail traders more guarantees in trading.
Unicorn with a market value of 155 billion yuan
Founded in 2002, Castle Securities is headquartered in Miami and is founded by Kenneth C. Griffin, a U.S. hedge fund manager.
Castle Securities is better known as the same name as global hedge fund giant Citadel LLC (Cast Investment).Castle Investment is also founded by Kenneth C. Griffin, but the two institutions are completely separate and independently operated. Castle Securities focuses on market maker business, while Castle Investment focuses on asset management business.
Castle Investment is a world-renowned hedge fund, founded in 1990. As of January 2025, its asset management scale has exceeded US$65 billion.According to statistics from LCH Investments, a well-known hedge fund investment institution, as of 2024, since its establishment in 1990, Castle Investment has made a total of US$83 billion in profits, maintaining the world’s “most profitable hedge fund” for the third consecutive year.
Although Castle Securities is not as famous as Castle Investment, its strength cannot be questioned.In January 2022, Castle Securities completed a US$1.15 billion financing with a valuation of US$22 billion, led by Sequoia Capital and others. It once ranked 13th in the “2024・Hurun Global Unicorn List” with its market value of RMB 155 billion.And according to the official information of Castle Securities.In US retail market making, 23% of US retail stock trading volume is executed through the Castle Securities platform.
In more than 20 years, Castle Securities has become a super unicorn.According to its official website data, it is the largest stock liquidity provider in the global capital market.In addition to stocks, its services cover a wide range of fixed income and stock products, and its unique advantage is to reduce transaction costs and help meet the liquidity needs of asset management companies, banks, brokerage trading brokers, hedge funds, government agencies and public pension plans.
In terms of executives, the CEO of Castle Securities is Zhao Peng.Zhao Peng was born in 1983. He was admitted to Peking University in 1997 and obtained a bachelor’s degree in applied mathematics in 2001. He later studied in the United States and received a doctorate in statistics from the University of California, Berkeley in 2006.Zhao Peng joined Citadel in 2006 as a quantitative researcher, and officially became the CEO of Castle Securities in 2017.
In addition to the announcement that it will join the Encryption market, on January 17 this year, it also submitted an application to the China Securities Regulatory Commission to establish a securities company in China.Whether it is entering the cryptocurrency market or actively expanding the Chinese market, it is enough to show its ambition to expand new businesses.
Compared with crypto-native market makers, the advantages of Castle Securities
A market maker with wide influence in the traditional financial world enters the crypto world, and the first thing that affects is undoubtedly some market makers native to the currency circle.
There are actually two types of market makers in the current currency circle.One is the AMM within Dex, and the other is the centralized market maker in Cex as in traditional finance.As for Castle Securities entering the cryptocurrency industry, what it wants to compete for is the business of centralized market makers.Compared with traditional finance, the market maker business of crypto markets is not essentially different.However, there are huge differences in operating models, technology, risk management and supervision.
First of all, in terms of market size, the crypto market is still relatively small compared to the traditional financial market, and the market scale of the crypto industry is also relatively small.The liquidity of the crypto market is relatively low and has large volatility, so market makers need to be more cautious in risk management; secondly, because the transaction process of the crypto market is difficult to regulate and there is no strict market maker system to restrict it.The relationship between trading platforms, project parties and municipal merchants has become more complicated.Then, the municipal business is not only generated on a centralized trading platform, but also involves on-chain market making, and based on this, some middleware and protocols serving market making have begun to appear; the last point is that in terms of technical architecture, the crypto industry needs to have higher technical capabilities to ensure the security of transactions.
However, in terms of operating model, there are not many differences between crypto market makers and traditional market makers. They mainly provide liquidity and market depth for the cryptocurrency market, while making profits from it.Like traditional market makers, crypto market makers also make profits through price spreads in buying, selling and trading behaviors.However, in the absence of regulation in the crypto market, such price spreads may be large, market volatility and returns will be more unstable.Crypto market makers also have two sources of income: helping project parties make markets and assisting trading platforms in maintaining sufficient liquidity and trading volume.
In the current crypto industry, the liquidity in the crypto market has basically been monopolized by several market makers, including Jump, Wintermute, Amber Group, B2C2, DWF Labs, etc.Taking DWF, which has become famous in the past two years as an example, it has always been famous in the circle because it is not only market-making, but also market-making.Its market-making model is often to help project parties pull up the market and ship the goods.Therefore, it has been criticized by retail investors.Market makers in the currency circle have a generally more barbaric and irregular market making style because they are not regulated.
According to the icon analysis of KOL Ai Aunt in June 2024, as of 2024.06.27, the sorting of several market makers from high to low on the on-chain funds is: 1. Jump Trading: 673 million US dollars; 2. Wintermute: 475 million US dollars; 3. GSR Markets: 86 million US dollars; 4. Amber Group: 50 million US dollars; 5. DWF Labs: 41 million US dollars; 6. B2C2: 37 million US dollars; 7. Flow Traders: 3.9 million US dollars.
Let’s look at the market-making amount of Castle Securities. According to the trading volume of about 23% of the US stock market disclosed on its official website, it will handle nearly $410 billion in transactions every day.This size is much larger than the sum of the top market-making chains in the currency circle.
It can be said that the entry of the castle is a dimensional reduction blow to the native crypto market makers in these currency circles.Especially the reason why Castle chose to enter is the bet on compliance supervision of the currency circle.Only when the currency circle has more rules can Castle Securities make markets in the way it is familiar to them.
However, the entry of the castle is based on the premise of compliance development of the currency circle, so that it can seize a larger share in the market.If the currency circle is still in such a chaotic and chaotic state, Castle Securities may not be able to share too much of a cake in this market.
However, from another perspective, the entry of the castle also shows that the pace of US encryption compliance is advancing step by step.These top financial institutions have always had the most sensitive sense of smell in the financial market.With the trend of compliance in the currency circle, Castle Securities can indeed gain a large market share in the compliance track.
The impact of Castle Securities entry on retail investors
This entry into the crypto track is a business expansion of Castle Securities, and it also indicates that crypto is developing towards mainstreaming.This also means that traditional financial institutions are increasingly accepting crypto assets.The reputation of Castle Securities in the traditional financial world has also given other traditional institutions a certain role model.
Specifically, as the world’s top market maker, Castle Securities has strong financial strength and a professional trading team.Its entry into the cryptocurrency field will provide the cryptocurrency market with more sufficient buying and selling orders, effectively narrowing the bid and selling spread, reducing transaction costs, making it easier for investors to find counterparties, and making transactions in the cryptocurrency market smoother and more efficient.
At the same time, Castle Securities can rely on its rich experience in risk management and market operations to play a certain stabilizing role in market fluctuations, reduce the sharp fluctuations in cryptocurrency prices, and bring more stability and predictability to the market, so as to attract more funds pursuing stable investment into the market.
In summary, for retail traders in the secondary market, they can definitely protect their interests more in specific transactions.
