Gerrit van Wingerden, the co-founder and chief technical officer (CTO) of Caspian, a comprehensive digital asset management solution provider, shared some valuable insights with CryptoGlobe at the Consensus: Singapore 2018 Conference.

Wingerden, who is also the managing director of Tora Trading Services’ offices in Japan, told us that there are some similarities between how cryptocurrency exchanges operate and how orders were processed in traditional financial markets.

The Stanford University computer science graduate first gave us some background about how Tora Trading started its operations in Japan. He explained that the investment portfolio and order management firm began offering a new execution management system in 2007 (in Japan).

At the time, Wingerden revealed that the:

state of the market [in Japan] was that [it was beneficial] to trade with many, many brokers … to sort of disguise your order flow because there was a lot of information that was given to brokers about who was trading in the market … so you needed to spread [across many brokers if you were] working with large orders.

Back then, he explained that traders had to also “pay commissions [to] many brokers” as there were many intermediaries facilitating the transaction process. “If you compare that to crypto now, it’s very similar” because there is not enough liquidity, Wingerden noted.

He added that poor liquidity and different “arbitrage strategies” are likely why people “trade across different [cryptocurrency] exchanges.” Also, because each digital asset exchange has their own (separate) API … and “if you are not trading programmatically, each exchange has their own web interface …. So [let’s say] you want to trade across 10 exchanges, [then] you need to have 10 web browsers open or you need to write to … 10 different APIs.”

Tora Trading Services ran into a similar problem back in 2007, Wingerden revealed. This happened when standard APIs were first introduced in the Japanese traditional financial markets as they allowed equity investors to directly access the markets instead of having to contact a broker and be limited to using their system.

In order to simplify the process, Tora Trading Services developed a “unified system” that allowed users to trade with many different brokers and then it was also “streamlined for the best user experience”, Wingerdan said.

From there, Tora began to add more asset classes to their platform including stocks, equity derivatives “such as listed options and futures … exchange traded bonds” and many other types of assets, Wingerdan noted.

He explained that due to the emergence of this new financial technology, the markets became “more regulated.” According to the former quantitative analyst at Lehman Brothers, “something similar” is about to happen in crypto.

Therefore, the digital asset space needs “compliance functionality” and this is something that his firm has added because many of their clients are large banks “that are regulated”, Wingerdan said.

The Caspian CTO then noted that last year (in 2017) clients became interested in trading cryptocurrencies. To meet the needs of their clients, Wingerdan’s company partnered with Kenetic Capital, a crypto-related firm that invested in various different initial coin offerings (ICOs).

The partnership involved leveraging Kenetic Capital’s experience in the crypto space and Tora Trading’s established financial platform to launch Caspian. As a complete crypto asset management platform, Caspian is “targeting institutions and sophisticated investors” who are looking to start trading cryptocurrencies.

Wingerdan explained that Caspian offers “access to all the [crypto] exchanges executions [which means their trading algorithms as well].” Per the CTO, his firm is “offering compliance because we do expect that the space is going to get [properly] regulated.”

At present, Wingerdan said there are about 15 clients that are in the process of “signing up” for their services and about 170 “qualified (or legitimate) leads” that may potentially be “converted into clients.”

To use the company’s services, clients are charged a “transaction fee” or what can be described as a “license fee to use [their] software”, Wingerdan said. When questioned about slippage on big crypto exchanges such as Bitfinex and how many exchanges Caspian’s platform is linked up with, Wingerdan said his firm’s newly introduced services are “currently connected to over 20 [digital asset] exchanges” and there are several internal processes in place that help to reduce slippage.

Responding to who they might be seen as their biggest competitors, Wingerdan said they have strategically partnered with B2C2, a cryptocurrency market maker and over-the-counter (OTC) trading desk. He added that the partnership will involve B2C2 “streaming their orders on [Caspian’s] platform” and they will “eventually be integrating” their other services.

This type of service allows users to access markets along with greater liquidity than what’s normally available through most crypto exchanges, Wingerdan said. However, his firm is “OTC desk neutral”, meaning that they’ve not decided which other exchangers they may potentially be working with as well.

Compared to other crypto trading platforms that are building everything from scratch, such as the newly launched StellarX, Caspian has experience working with a platform that has already been established for many years, Wingerdan noted.

He added that there might be a lighter version of their crypto trading service introduced to retail investors “toward the middle of next year.” This is also another reason why Kenetic Capital is involved in their expansion efforts, as they are interested in reaching a broader customer base, Wingerdan revealed.

Going Forward

Notably, Wingerdan confirmed that Caspian raised $16 million from its private token sale (pre-sale not available to US and Chinese investors) and their public sale began on October 3rd with a combined fundraising target of $19.5 million.

Caspian also recently partnered with Blocktower Capital, a leading New York-based crypto investment firm, and teamed up with billionaire crypto investor Michael Novogratz’s Galaxy Digital (in July 2018). The partnership involves improving the infrastructure for their trading platform in order to accommodate institutional investors.