Who is Secondary Digital Asset Exchange Investor?

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In its purest form, a digital asset exchange is a technological gizmo that facilitates exchanges of a digital asset. A digital asset is an asset that is akin to stocks in that it is speculative, but not entirely risk free. The digital asset is typically not traded on a single exchange. However, it is gaining prominence as a viable investment vehicle. This is because it is a decentralized market that has the potential to revolutionize the way we buy, sell, and trade assets in the future.

The main benefit of a secondary.digital asset exchange is that it allows investors to diversify their portfolios. For instance, an investor can acquire a Bitcoin on one exchange and move it into a wallet on another crypto exchange. To facilitate this, an exchange acts as a middleman by arranging for a counterparty. Despite the fact that a cryptoexchange may not be able to segregate ownership from a corporate balance sheet, the resulting structure is a viable alternative to traditional custodial services.

Digital asset exchanges come in all shapes and sizes, and as the market expands, so does the number of providers and their offerings. As the digital asset market matures, investors are looking to established markets for guidance. A few of the world's leading financial institutions have jumped on the bandwagon by creating trading desks for cryptocurrencies. These include JP Morgan, which invested in Web3 technology and plans to spend $12 billion in fiscal year 2019.

Fortunately, the market is ripe for the picking. Some of the world's largest wealth managers have paired up with crypto-focused companies in the hopes of wooing crypto investors. While cryptos can be a viable option, it is not for everyone. Many unsophisticated investors simply are not savvy enough to weigh the pros and cons of a digital asset before they invest. Moreover, a plethora of legal and regulatory concerns could potentially hinder the aforementioned evolution of the exchange. Fortunately, the SEC has taken the lead on the oversight of digital asset exchanges and is implementing its own regulations to keep the market safe.

There are two basic types of digital asset businesses, namely, the crypto exponent and the digital asset broker. Cryptoexponents are companies that handle digital assets for others, whereas digital asset brokers are licensed operators of digital asset businesses. Depending on the jurisdiction, this can range from a simple custodian to a fully-fledged brokerage.

The most exciting development in the digital asset space is the ability to trade digital tokens across jurisdictions. This is an important step to institutionalizing digital assets as a business.