Amidst the escalating regulatory battle between authorities and centralized exchanges, institutional investors appear to have remained steadfast in their interaction with these exchanges.
According to a survey conducted by Binance Research and Binance Institutional, a staggering 90.5% of participating institutional investors execute the majority of their trades on centralized exchanges.
The majority of institutional investors favor centralized exchanges as their preferred trading platforms, with only 9.5% utilizing decentralized exchanges (“DEXes”) and over-the-counter (“OTC”) desks.
Furthermore, centralized exchanges remain the top choice for institutional investors when it comes to storing financial assets. According to the survey, “58.2% of institutional investors store their crypto assets on CEXes, while 20.2% prefer institutional custodians such as Ceffu and Fireblocks.” However, some investors opt for self-custodial cold or hot wallets as an alternative storage option.
The metric aligned with fund sizes, as most investors utilize CEXes for asset custody. However, for AUM of $50M – $75M (54.5%), institutional custodians became a more popular choice as a storage venue. It is worth noting that investors with AUM > $100M employ diverse mediums.
When selecting a centralized exchange to engage with, investors take into account various factors. Liquidity, security, and reputation are among the key traits they prioritize. This is likely due to their substantial trade sizes and the need to store a significant portion of their assets on centralized exchanges.
Finally, these investors are not without concerns. Their key concerns include regulatory risks and counterparty risks. However, investors seem undeterred by the price volatility of cryptocurrency. The Binance research team stated that in another survey, “over 80% of investors [said] that they are highly comfortable with crypto’s volatility.”
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