Citadel Securities is reportedly planning to enter the crypto market making space, aiming to provide liquidity on major crypto exchanges, according to a report by Bloomberg News on Feb. 24.
Sources familiar with the matter have revealed that the firm is preparing to establish its presence in the crypto markets by joining market makers on platforms operated by Coinbase, Binance, and Crypto.com.
Initially, Citadel’s crypto expansion will focus on non-US markets, subject to exchange approval.
The firm has not yet confirmed the extent of its market-making ambitions, and 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 so far avoided direct involvement in crypto market-making. However, Jane Street Group, a major player in exchange-traded funds (ETFs) and corporate bond markets, has been executing crypto trades since 2017.
In addition, Jump Trading established a crypto division called Jump Crypto and has become 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 their focus towards international financial hubs such as Dubai, Singapore, and Hong Kong.
As a result, Citadel’s expansion indicates growing confidence in the maturation of crypto markets, 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) has established a dedicated crypto task force led by pro-crypto Commissioner Hester Peirce, who is known for supporting pro-innovation regulatory policies.
Despite its cautious approach to the crypto market, Citadel has developed the EDX Markets exchange in collaboration with brokerage firms Charles Schwab and Fidelity Investments. The exchange aims to replicate the settlement and custody mechanisms used in traditional securities markets for institutional customers.
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