DeFinity taps Cobalt for clearing and settlement on crypto ECN and DeFi platform

Rick Steves

“The partnership provides an enterprise solution for digital assets to interact with traditional FX counterparties with roles throughout the execution lifecycle – custody, execution, clearing, and settlement – clearly defined”

DeFinity, an institutional digital asset ECN and DeFi marketplace for fiat FX, Cryptocurrencies and Central Bank Digital Currencies has partnered with Cobalt.

Cobalt focuses on re-engineering the institutional FX and digital asset markets to facilitate real-time clearing, settlement and dynamic risk and credit management.

Under the new partnership, DeFinity will enable institutional investors to retain independent custody pre-trade while providing a consolidated view of fiat and digital asset positions. Cobalt will be able to distribute its post trade solution to a broader demographic of institutional traders.

Crypto in identical point of evolution that Fiat FX was in the 1980’s

The two companies will combine their technology to leverage the processes of capital markets for digital asset trading, creating a secure technical infrastructure by maintaining the legal confirmation of each transaction.

Manu Choudhary, CEO and Co-founder of DeFinity, said: “Currently digital assets are at the identical point of evolution that Fiat FX was in the 1980’s with large bid/offer spreads, an absence of standardisation, insufficient segregation of duties, combined with inefficient and fragmented liquidity, which introduces far greater operational and systemic risk for participants.

“The partnership provides an enterprise solution for digital assets to interact with traditional FX counterparties with roles throughout the execution lifecycle – custody, execution, clearing, and settlement – clearly defined”, he continued.

“Our vision is to establish DeFinity as a leading electronic communication network (ECN) delivering sustainable and non-fragmented digital asset liquidity to market participants is hugely enhanced by our partnership with Cobalt, not only because of their revolutionary clearing infrastructure, but due to the fact that some of the world’s largest banks and funds are already clients and investors. The asset custody or credit intermediation functions are kept at arms-length with trustworthy counterparties as inspired by the best practices of the global currency markets.”

Darren Coote, Chief Executive Officer of Cobalt, added, “A significant number of financial institutions are eager to capitalise on the cryptocurrency expansion, but the lack of institutional-grade infrastructure limits investment opportunities. The prevailing settlement process is extremely manual, open to significant risks, and not adequate for institutional trading. Cobalt is one of the only firms providing critical market infrastructure in both digital assets and FX and our partnership with DeFinity will help to distribute our post trade solution to a broader demographic of institutional traders.”

Michael Siwek, Chief Revenue Officer and co-founder of DeFinity Markets, commented: “Institutional clients are excited to use our infrastructure to transact, record and settle trades efficiently utilising our proprietary blockchain to increase transparency and TCA capabilities, therefore boosting investor confidence materially.”

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Cobalt’s digital asset settlement developed with Metaco

It was in September 2020 that Cobalt announced it would be expanding into the digital asset market as the firm saw the trend being accelerated by the decision of the OCC (US Banking Regulator) to allow US banks to hold digital assets.

Major FX institutions are now looking to trade digital assets, yet enterprise standard post-trade infrastructure in this market is virtually non-existent. For these participants to enter this market at scale it is critical to ensure the correct management of credit and data, to which end Cobalt brings its post-trade and credit FX solutions to the digital asset market.

Earlier this year, Cobalt and Metaco joined forces to provide an institutional-grade Software as a Service (SaaS) solution for digital asset settlement. The partnership addresses the issues found by banks and financial institutions as the institutional adoption of digital assets progresses.

The lack of available institutional-grade infrastructure has come as an opportunity to integrate METACO’s institutional operating system for digital assets, SILO, with Cobalt’s interoperable FX and digital assets platform. The result of the team-up is an end-to-end SaaS solution for the storage, limit allocation, and intraday settlement of digital assets.

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