GuShiio.com Castle Securities’s transition from wait-and-see to entering is no accident. The institutionalization of the crypto market, the gradual clarity of regulation, and competitive pressures have jointly promoted this process.
Author: KarenZ, Foresight News
The entry of the top market maker Castle Securities into Bitcoin market making is a sign of the maturity of the Bitcoin market and a key step for traditional financial forces to compete for future asset pricing power. At the same time, for retail investors, it may mean a gradual weakening of their voice.
On February 25, Bloomberg reported that Citadel Securities was seeking to become a liquidity provider for cryptocurrencies. People familiar with the matter said the company’s goal is to join the list of market makers on various exchanges, including exchanges operated by Coinbase Global, Binance Holdings and www.example.com. Crypto.com Once approved by the exchange, the company initially planned to establish a market-making team outside the United States.
This move not only marks a major strategic transformation for Castle Securities, but also indicates that the crypto market may usher in new changes.
Citadel-King of Hedge Funds
Hedge fund Citadel and Citadel Securities, which focuses on market making, are both organized by Kenneth C., the “programmatic trading genius”. Griffin was founded. In 1987, then 19-year-old Ken Griffin started his trading career in a Harvard dormitory, and then founded his own investment group Citadel (formerly Wellington Financial Group) for $4.6 million in 1990.
Citadel’s asset management scale as of the end of 2024 has reached US$66 billion. According to statistics from LCH Investments, Citadel’s net income from top hedge funds since its launch to the end of 2024 has the highest, reaching US$83 billion, surpassing D. E. Shaw, Millennium (Millennium Management Company), Bridge Water Fund.
Castle Securities-the largest designated market maker on the New York Stock Exchange
Kenneth C. Griffin launched the market-making division in 2002, which was later spun off from Citadel and operated independently to become Citadel Securities. Today, Castle Securities has also become one of the world’s largest market makers, especially in the U.S. capital market. Castle Securities’s main business is to provide liquidity to traditional financial markets such as stocks, options, fixed income products, and ETFs. Through high-frequency trading technology and algorithms, it ensures that buyers and sellers in the market can efficiently match transactions.
According to its official website, Castle Securities has a nominal daily trading volume of US$503 billion, accounting for approximately 35% of retail stock trading in the United States. It is the largest designated market maker on the New York Stock Exchange (with a share of 65%).
The turning point for Castle Securities to become famous in World War I was the GameStop short event in 2021. At that time, retail investors in the United States used social media to push up the share prices of “meme stocks” such as GameStop, causing heavy losses to institutions that shorted these stocks. Castle Securities, as the main market maker in the U.S. stock market, handles a large number of related transactions. In this incident, Castle Securities became famous by demonstrating strong trading execution capabilities.
It is worth mentioning that Zhao Peng, CEO of Castle Securities, is a Chinese American born in the 1980s born in Beijing City. He was admitted to the Department of Applied Mathematics at Peking University in 1997 and later went to the University of California at Berkeley to study for a doctorate in statistics. He also served as a summer quantitative research assistant at Lehman Brothers. After graduation, Zhao Peng joined Castle Securities. He started as a senior quantitative researcher and served as a global market-making director and chief scientist, and was finally promoted to CEO in 2017.
After Zhao Peng became CEO in 2017, he promoted the company’s international expansion, especially in the Asian and China markets. In 2023, Castle Securities China Limited obtained the Qualified Foreign Investor Qualification (QFII) and submitted an application to establish a securities company in China in January 2025.
Castle Securities: From wait-and-see, cautiously testing the water to entering the crypto market
Castle Securities ‘history in the crypto market starts from founder Kenneth C. Griffin has gone through doubts, wait-and-see, testing the waters and entering the game, from comparing “Bitcoin to the tulip bubble” to calling it “one of the greatest stories in the financial sector” to frankly saying that he “regretted not buying cryptocurrency sooner.” This not only reflects its strategic adjustment to emerging markets, but also reflects the trend of traditional financial giants gradually accepting crypto assets.
Initially, the founders of Castle Securities were skeptical and wait-and-see about the crypto market. In its early days, cryptocurrencies were regarded as a high-risk, highly volatile asset class, and regulatory uncertainty also deterred many traditional financial institutions. Castle Securities is known for its solid position in the stock, options and fixed income markets, and naturally will not easily venture into an immature field. Kenneth C. Griffin, as a founder, was publicly skeptical of cryptocurrencies.
However, with the rapid development of the crypto market and the rising interest of institutional investors, Castle Securities ‘attitude began to loosen. After the GameStop incident, retail investors ‘craze and market volatility drew attention to the potential connection between traditional finance and emerging assets. In the same year, trading volume in the crypto market surged, and assets such as Bitcoin and Ethereum were gradually seen as investable categories. In the same year, Kenneth C. Griffin also bid more than US$43 million for a rare copy of the U.S. Constitution in 2021, defeating the DAO organization ConstitutionDAO (ConstitutionDAO crowdfunded more than 10,000 ETH at the time).
Kenneth C. Griffin also said in an interview in 2022 that in the past 15 years, cryptocurrency has been one of the greatest stories in the financial world, and admitted that Citadel will be exposed to cryptocurrency in the coming months.
In January 2022, Castle Securities announced that it had received US$1.15 billion in minority equity financing from Sequoia Capital and Paradigm, an investment institution focusing on the cryptocurrency field. Matt Huang, co-founder of Paradigm, said at the time: “I look forward to Castle Securities expanding its technical expertise into the crypto market.”
It is worth mentioning that after the UST decoupling incident occurred in 2022 and caused severe market fluctuations, Internet rumors alleged that Castle Securities and BlackRock borrowed large amounts of bitcoin from Gemini and sold UST, triggering a collapse. In response, a Citadel representative told Bloomberg that Citadel does not trade stablecoins, including UST. Later, in 2023, Terraform Labs also filed a motion requesting Castle Securities to submit relevant transaction data for May 2022. In response, Castle Securities responded that it conducted two test transactions in March 2022 alone, a few months before the UST crash, with a transaction value of only US$0.13, and refuted Terraform Labs ‘claims.
Starting from the second half of 2022, Castle Securities has taken more substantial steps. In June, Bloomberg reported that Kelly Brennan, head of ETF at Castle Securities, said that if crypto ETFs received regulatory approval, they would be ready to make markets for these products. In addition, Castle Securities has also launched EDX Markets, an institutional cryptocurrency exchange with Charles Schwab, Fidelity Digital Asset, Paradigm, Sequoia Capital and Virtu Financial, aiming to provide a secure, efficient and compliant trading environment for crypto-native companies and large global financial institutions. EDX Markets completed a financing in June 2023, with investors including Miami International Holdings, DV Crypto, GTS, GSR Markets LTD and HRT Technology. Subsequently, in January 2024, EDX Markets completed another Series B financing, led by Pantera Capital and Sequoia Capital.
In August 2022, Castle Securities also invested in digital assets and foreign exchange brokerage firm Hidden Road Partners. In February 2023, Castle Securities reported holding a 5.5% stake in crypto-friendly bank Silvergate Capital.
After entering 2023, Castle Securities has become more obvious signs of entry. For example, the expansion, integration and internationalization of EDX Markets has been selected by BlackRock as an Authorized Participant (AP) of the iShares Bitcoin Trust (IBIT). Late last year, Kenneth C. Griffin said he regretted not buying cryptocurrency a few years ago.
What is the impact of Castle Securities ‘entry into the crypto market making?
Castle Securities’s transition from wait-and-see to entering is no accident. The institutionalization of the crypto market, the gradual clarity of regulation, and competitive pressures have jointly promoted this process.
This not only marks the further recognition of the crypto market by traditional financial giants, but may also reshape the landscape of bitcoin and crypto trading ecosystems. On the one hand, this symbolizes the extension of traditional financial infrastructure to the crypto field, which will further promote the transformation of Bitcoin from a marginal asset to a mainstream investment category, especially its acceptance among institutional investors, and may attract more hedge funds, Traditional players such as pension funds enter the Bitcoin market and allocate Bitcoin.
On the other hand, market-making by Castle Securities may significantly increase order depth and trading volume in the Bitcoin market, bringing greater transparency and stability to the crypto market. At the same time, Castle Securities provides liquidity to mainstream exchanges such as Coinbase and Binance, which will enhance the trading experience of these platforms and attract more institutional capital inflows.
Its entry may also trigger follow-up from other financial giants (such as Jane Street), intensifying competition in the field of crypto market-making. Of course, this will also squeeze the market share of existing crypto market makers. Small and medium-sized market makers may be marginalized because they cannot match Castle Securities ‘technological and cost advantages.
However, for retail investors, the admission of Castle Securities brings both convenience and hidden challenges. With the influx of institutional funds and professional market makers, the Bitcoin and crypto markets may shift from “retail investors” to institutional home markets, and retail investors ‘voice may gradually shrink.
