FalconX, a digital asset prime brokerage that says it has executed over $1.5 trillion in trading volume, has joined Crypto.com, Galaxy, Wintermute and others as a launch partner for Lynq, a platform that aims to be a settlement layer for digital asset and financial institutions. The launch of Lynq could underscore growing institutional interest in digital assets as regulatory clarity improves.
FalconX, which says it access to over 400 tokens, will “act as both a participant and a liquidity provider on the Lynq network,” Lynq CEO Jerald David told Cointelegraph.
Lynq, developed in partnership with Arca Labs, Tassat Group and tZERO Group, aims to provide a solution that deals with evolving regulatory frameworks and counterparty risk, according to a Tuesday announcement. Those issues may be important to institutions that adhere to strict regulations and are looking to launch crypto products.
In crypto, settlement is the final part of the process in which funds are transferred between parties, and the transaction is recorded on the blockchain. Some examples include sending tokens from one party to another, releasing collateral stored in a contract, and token generation events where tokens are automatically distributed to investors.
Anchorage Digital, a Web3 company that caters to institutions, has an institutional settlement network called Atlas. BVNK, a crypto company based in London, is involved in various crypto settlement processes.
Some examples of blockchain-based settlement networks include Kinexys by J.P. Morgan and the “Project Ion” platform by a major US equities clearinghouse.
Of the Lynq platform, David said, “access to the Lynq Network is available at no cost to participants, and transactions on the network are not subject to transaction fees. Lynq’s revenue is derived by taking a small portion of interest from the portfolio.”
The platform will start its final user acceptance testing phase on Friday.
Related: FalconX acquires majority stake in Monarq — Report
Growing institutional interest in crypto
The impending launch of Lynq may signal growing interest among institutions toward digital assets, especially for stablecoins, which are becoming more widely used in settlement processes.
According to DefiLlama, the stablecoin market capitalization amounts to $251.4 billion as of Tuesday, marking a 55.5% increase in one year.
Stablecoins offer some benefits to traditional fiat currency, including reduced transaction costs, faster settlement times, and improved liquidity. These benefits amplify when dealing with cross-border transactions or countries where reserve fiat currencies, such as the US dollar, are held in low supply.
According to a Fireblocks survey, 90% of institutions are using or have plans in the works to use stablecoins. In May, The Wall Street Journal reported that several large US banks were in early talks to issue a joint stablecoin.
Magazine: Danger signs for Bitcoin as retail abandons it to institutions — Sky Wee
