Bridging the Gap: Trading Crypto-to-Fiat Pairs in a Stablecoin-Dominated Market

Case Studies Oct 24, 2023

The digital realm of finance has never been more dynamic, with stablecoins leading the charge. As fintechs, brokers, and traditional fiat-denominated funds grapple with this rapidly changing landscape, understanding the nuances and crafting innovative solutions is imperative.

The Shift in Stablecoin Dynamics

Over the last 12 months, the share of fiat currencies in cryptocurrency trading, though much smaller than a few years ago, has remained relatively stable. What's captivating is the ever-evolving stablecoin landscape. A year ago, USDT dominated with around 60% of overall volumes on major crypto exchanges, followed by BUSD at approximately 22%. Today, USDT has marginally increased its dominance to 62%, while BUSD has plummeted to 1%, likely influenced by regulatory restrictions on Paxos, its issuer. Newcomers like FDUSD have claimed a respectable 15% market share, reflecting the dynamic nature of this space.

The Complex Landscape for Financial Entities

Navigating the crypto-fiat confluence isn't exclusive to fintechs; it's a challenge that resonates across the finance spectrum, from traditional funds to a variety of Financial Service Providers (FSPs):

  • Liquidity Dilemmas: A vast majority of cryptocurrencies lack substantial liquidity when paired with fiat currencies. This results in trading bottlenecks, where entities can't seamlessly transact desired amounts without considerable market impact.
  • Inefficiencies in Settlements: The fiat realm is riddled with transactional delays. Whether it's an FSP providing services to its clients or a traditional fund managing its portfolio, these slowdowns often disrupt efficient operations.
  • Narrow Currency Trading Options: Beyond the dominant USD and EUR markets, options for other major fiat currencies are scant, limiting trading opportunities for institutions with diverse currency portfolios.

For both FSPs and traditional funds, crafting solutions to navigate this complex territory is crucial to remain competitive and efficient in today's financial landscape.

Day trading for a living. It takes energy, time, practice, focus, discipline and much more. It gives freedom in return.
Photo by Adam Nowakowski / Unsplash

The Mechanics of Aplo's Synthetic Trading

Aplo's synthetic trading solution is a masterclass in innovation. But how does it really work?

  • Deep Market Integrations: As a cryptocurrency Prime Broker, Aplo connects to a plethora of crypto and FX markets. This vast network enables the creation of synthetic markets tailored to a financial service provider's needs.
  • Instant Credit Lines: Our platform offers immediate credit lines. Clients can quickly open and close positions or even rebalance holdings, settling everything at day's end.
  • Banking Network Collaboration: Our affiliations with various banking networks facilitate swift settlements.

Navigating the intricacies of individual banking networks and exchanges can be cumbersome. Consider this: a financial service provider taps into an exchange's liquidity by transferring their fiat. Still, they're confined to just that platform's liquidity pool. The ensuing steps? Manually dispatching stablecoins to different exchanges based on prevailing liquidity trends for specific asset-USDT pairs. Quite a process, isn't it?

Enter Aplo. We've preempted these challenges. Not only do we provide a direct gateway for fiat deposits, but we also come equipped with established connections that facilitate the swift dispatch of stablecoins to the leading exchanges. And we do this via the most efficient and secure channels available. In essence, we've evolved to function as a "meta exchange", seamlessly amalgamating the diverse capabilities of multiple platforms. This ensures our clients focus solely on what they do best: trading.

Anecdote: When an index fund client faced the intricate challenge of moving a considerable amount of BNB to EUR in a market devoid of a native pair, Aplo's synthetic trading tool was their saving grace. This facility ensured a seamless, efficient, and low-impact transaction, exemplifying our solution's prowess.

Simplified example of how Aplo created a synthetic BNB/EUR market for a client

The Intricacies of the MiCA Framework

In the rapidly evolving landscape of fiat-crypto trading, upcoming regulations are set to play a pivotal role. The Markets in Crypto-Assets Regulation (MiCA) is on the horizon, poised to shape the future of crypto-asset trading within the EU. As we anticipate its rollout, MiCA will introduce uniform rules for crypto-assets, especially around the transparency and integrity of trading these digital assets, including asset-reference tokens and e-money tokens (often termed as stablecoins).

While MiCA is yet to be fully implemented, its influence is already palpable. Aplo, as a leading platform dedicated to bridging the fiat-crypto divide, is diligently preparing for this next phase. As a French DASP, we've proactively put measures in place, aligning with the expected MiCA standards. This proactive approach ensures that Aplo remains at the forefront, offering clients the advantage of a platform that's not only in tune with current regulations but is also ahead of the curve in preparing for what’s next in the European crypto regulatory landscape.


Envisioning the Financial Future

A trio of innovations promises to redefine finance:

  1. CBDCs: Touted to replace cash for EU's minor transactions.
  2. Stablecoins: Emerging as the linchpin of major institutional settlements.
  3. Tokenized Assets: Poised to directly issue stablecoin-backed cash flows.

For every fintech, crypto broker, and traditional fund, success hinges on leveraging platforms that are not only abreast of these innovations but also adept at harnessing them.

The New European Central Bank
Photo by Clemens van Lay / Unsplash

Experience the future of crypto trading with Europe's leading regulated crypto prime broker. At Aplo, we don't just offer solutions—we set the industry standard. Driven by the dedication of seasoned traders and built on the foundation of security and transparency, we ensure your trading is seamless, safe, and optimized for success. Join the ranks of confident traders with Aplo. Let's elevate your trading journey together. Get started here.


Oliver Yates

Founder & CEO @ Aplo

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