Citadel Securities Expands Into Crypto—Liquidity for Binance, Coinbase & Others

• Citadel Securities is considering becoming a liquidity provider for major crypto exchanges.

• The firm’s involvement depends on regulatory clarity in the U.S., where new policies could encourage institutional participation.

Citadel Securities is reported to be considering becoming a liquidity provider to giant cryptocurrency exchanges. The decision is a change of policy from its previous conservative approach toward retail crypto trading. As reported by Bloomberg, the firm is evaluating potential partnerships with major exchanges such as Binance, Coinbase, and Crypto.com.

Initially, Citadel Securities aims to expand to international markets to operate as a market maker. The firm’s decision falls in line with the predicted boost in the crypto market under Trump’s presidency. However, its participation will depend on the following regulatory measures that will still be witnessed in the United States in the coming months.

If regulatory clarity emerges, Citadel proposes to actively engage in making markets in crypto assets similar to other established asset classes. Earlier, the firm refrained from engaging with the crypto market as they suspected it to be manipulative and featured a weak regulatory environment.

Citadel’s Past Crypto Involvement 

Despite its cautious approach, Citadel Securities has not been active in the crypto industry but has invested selectively. As reported by CNF, in June 2023, it launched its own institutional crypto trading platform, EDX Markets, in cooperation with Charles Schwab and Fidelity Investments. The firm had previously dealt with Terraform Labs before the crash and dismissed its association with the new TerraClassicUSD (USTC) stablecoin. Citadel stated that it carried out two sample transactions with a combined value of $0.13. 

The firm’s decision not to enter retail crypto trading earlier can be attributed to some external factors such as instability in the market following FTX in 2022. The case exposed the lack of regulation and created doubts about the relationships of exchange with other entities. However, the recent changes in the regulation are putting pressure on the market in the crypto space.

Financial firms are expecting some increased clarity in their regulatory environment under the Trump administration. President Trump has been very vocal about making America great again when it comes to digital assets. There is also some discussion about establishing a US Strategic Bitcoin Reserve for dealing with debts.

New SEC Crypto regulations

The Securities and Exchange Commission (SEC) has recently initiated efforts to curb uncertainty in its regulation. The new crypto task force, under the leadership of Commissioner Hester Peirce, was announced to launch a legal structure governing digital asset trading. This development may lead to more institutions, such as Citadel Securities, to enter the market.

While Citadel Securities remains cautious, other firms like Jane Street and Jump Crypto, among others, have been trading in crypto since 2017. However, in 2023, they had to pull out from some operations in the US because of regulatory issues in the market and began targeting other global cities such as Dubai, Singapore, and Hong Kong. Although these firms reduced their activities within the U.S., they were still active in global crypto markets.