The kind of white glove service reserved for high-net-worth clients in the banking sector has now arrived in the crypto space – a sign of the growing sophistication in this market.
OVEX, SA’s largest prime crypto broker, has positioned itself as the first private bank for cryptos in SA, targeting high-net-worth individuals and institutions such as hedge funds and asset managers.
“There is a need for a private bank-type brokerage servicing the high-net-worth and institutional markets,” says OVEX CEO Jon Ovadia. “Clients that are looking for large crypto volumes would struggle to get their orders filled on a typical exchange. We don’t have that problem because of our strong balance sheet and deep liquidity. We can handle orders of virtually any size.”
Ovadia notes a growing interest in cryptos from institutional investors and high-net-worth individuals looking for exposure to an asset class that has the potential to deliver outsized returns.
“The sharp sell-off in financial markets across the board has been particularly severe in cryptos, and more notably altcoins, but history tells us that the market will turn and when it does, cryptos will more than likely surpass that of more traditional financial markets.”
Crypto adoption poses some interesting use cases for hedge funds and asset managers. One of these is the opportunity to arbitrage crypto price mismatches between different exchanges, without exposure to volatile price moves.
But other use cases have emerged as potentially even more interesting for institutional players. OVEX now has a presence in multiple jurisdictions, including Nigeria, Ghana, Botswana, Mozambique and Senegal, and will soon offer fiat on-ramps in local currency for clients who want exposure to these countries.
That means payments and remittances can be made using fiat, crypto or stablecoins, and all of this in seconds.
“Notwithstanding what has happened to the TerraUSD stablecoin, it is a fact that the biggest growth in the crypto space is in stablecoins, backed by real assets such as the US dollar, and the huge advantages these bring over traditional forex,” says OVEX marketing lead Nick Bergonzoli.
“We have now bridged the gap between traditional finance and crypto with our fully licensed FX Service. OVEX FX enables us to transact on behalf of clients in both forex and cryptos. Trading both forex and cryptos under one roof is obviously far more efficient and reduces counter-party risk.”
Stablecoins offer some of the more interesting use cases in the crypto space because of the ability to transact 24/7 (unlike banks, which only transact during trading hours) and settle within seconds (again, banks can take several days to clear a cross-border transaction).
The need for a private banking solution for cryptos is driven in part by the lack of regulation in the sector, and that has kept many institutional investors sitting on the sidelines, waiting for some regulatory certainty. OVEX is well prepared for the day when the regulatory environment matures, and requires all customers to undergo Know Your Customer and Anti-Money Laundering procedures. OVEX also undertakes extensive due diligence on all corporate accounts. This bodes well with institutional players who have strict reporting standards and regulatory oversight.
Several other steps are required to provide comfort to institutional players: a strong balance sheet, deep liquidity to handle large trading orders, institutional grade digital asset security and audited financial statements (OVEX is audited by accounting firm Mazars).
OVEX also makes it extremely easy for institutions with large client bases to easily trade for their clients under their own broker account. Whether you are trading for 10 clients or 10 000 clients the process remains unchanged. You can book a single batch trade for all clients at one single price. Fill out an OVEX allocation sheet and OVEX’s trading team does the rest.
Bergonzoli says OVEX is uniquely positioned to address the institutional market in SA for several reasons:
- The ability to offer clients large credit lines and trade instantly;
- A dedicated trading team is on hand 24/7;
- Instant execution;
- State-of-the-art institutional grade security (predominantly offline ‘cold storage’ backed up with multi-signature best practices);
- Zero price slippage (prices are locked on orders of any size);
- OVEX offers the largest range of currency pairs and digital assets in SA;
- The ability to transact across multiple jurisdictions;
- Robust balance sheet and credit history; and
- Competitive transaction pricing for large volumes.
Clients get access to an experienced crypto trading team to help explain some of the use cases for cryptos that would assist them in achieving their investment and performance outcomes.
“This is a relatively new field for many institutional players, so we dedicate a lot of time to helping them understand what is happening in the crypto space, and we spend time understanding their goals,” says Bergonzoli.
“There’s a lot of interest among institutions in using crypto rails for stablecoins in forex, which can vastly reduce the costs and friction associated with traditional forex.”
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