Citadel eyes crypto market making expansion amid regulatory shifts

Citadel Securities is reportedly planning to expand into crypto market making, with the aim of providing liquidity on major crypto exchanges, Bloomberg News reported on Feb. 24.

People familiar with the matter told the news outlet that the firm is preparing to establish a presence in crypto markets by joining market makers on platforms operated by Coinbase, Binance, and Crypto.com.

The sources also indicated that Citadel’s crypto expansion will initially focus on non-US markets, contingent on exchange approval.

The firm has yet to confirm the scope of its market-making ambitions, and the extent of its involvement will likely depend on regulatory developments in the coming months.

Regulatory landscape and market impact

Unlike some of its trading peers, Citadel has avoided direct involvement in crypto market-making. Jane Street Group, a major player in exchange-traded funds (ETFs) and corporate bond markets, has executed crypto trades since 2017. 

Additionally, Jump Trading established a crypto division, Jump Crypto, and became one of the leading liquidity providers in the space.

However, regulatory challenges prompted Jane Street and Jump Crypto to scale back their US-based digital asset trading operations in 2023. Increased regulatory scrutiny led many firms to shift focus toward international financial hubs such as Dubai, Singapore, and Hong Kong.

Consequently, Citadel’s expansion signals growing confidence in the maturation of crypto markets. This is contingent on a regulatory roadmap that allows established financial firms to participate more actively following President Donald Trump’s election.

Trump pledged to position the US as the “crypto capital of the planet.” Since taking office, his administration has issued an executive order on crypto to create a regulatory framework.

Furthermore, the Securities and Exchange Commission (SEC) established a dedicated crypto task force led by pro-crypto Commissioner Hester Peirce, known for supporting pro-innovation regulatory policies. 

Despite its cautious approach to the crypto market, Citadel developed the EDX Markets exchange alongside brokerage firms Charles Schwab and Fidelity Investments. The exchange is designed to replicate the settlement and custody mechanisms used in traditional securities markets for institutional customers.

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