Flowdesk, a key player in crypto market-making and over-the-counter trading, successfully secured $50 million in Series B funding.

This funding, led by Cathay Capital's venture arm and supported by influential contributors such as Cathay Ledger Fund, Eurazeo, ISAI, Speedinvest, BPI, and Ripple, marks a significant milestone in Flowdesk's expansion journey, including regulatory licensing pursuits in Singapore.

Liquidity Provision for Grayscale's Spot Bitcoin ETF

Flowdesk collaborates with industry leaders like Jane Street, Virtu, and Flow Traders, serving as one of the four liquidity providers for Grayscale's recently approved spot bitcoin ETF. This role positions Flowdesk as a critical player in ensuring the seamless functioning of the ETF's trading mechanisms.

Regulating Bitcoin Transactions

Liquidity providers, including Flowdesk, play a crucial role in regulating bitcoin transactions. This regulation hinges on investors creating or redeeming ETF shares, ensuring that the ETF's price closely aligns with the value of bitcoin.

This approach offers investors a secure and regulated avenue for engaging in bitcoin trading without direct ownership of the digital currency.

Pre-funding Requirements and Risk Mitigation

To meet pre-funding requirements, liquidity providers like Flowdesk allocate funds in advance to cover trades. This proactive measure not only guarantees the availability of funds to complete trades but also significantly reduces the risk of default. This strategic approach aligns with a more structured and regulated ethos, standing in contrast to the often instantaneous and decentralized dynamics of crypto trading.

Flowdesk's Funding Journey

CEO Guilhem Chaumont revealed that the funding round concluded towards the end of the previous year, with the term sheet signed in mid-2023. Despite the immediate aftermath of spot bitcoin ETF approval, Chaumont emphasized that the ETF wasn't initially part of their plans when closing the fundraise. In June 2022, Flowdesk had previously raised $30 million in a Series A round.

While specific details about Flowdesk's share in Grayscale's spot bitcoin ETF trading volume remain undisclosed, the company's significant role as one of the four liquidity providers for the ETF is noteworthy. Recent data indicates a potential market shift, with BlackRock's IBIT registering $304 million in daily trading volume compared to $292 million for Grayscale's converted GBTC fund, signaling changing dynamics in the market.