Citadel Securities Enters Crypto Market Making: Strategic Moves & Market Impact

Citadel Securities’ Crypto Market-Making Plan

According to Bloomberg, Citadel Securities recently announced its formal expansion into crypto market making, with plans to join the market maker rosters of major exchanges like Coinbase, Binance, and Crypto.com. The firm may initially prioritize building its market-making teams outside the U.S. to sidestep regulatory uncertainties. Notably, Citadel Securities previously partnered with traditional financial giants Charles Schwab and Fidelity Investments to launch EDX Markets, a crypto exchange tailored for institutional investors.

Corporate Background and Market Position

As a top-tier global market maker, Citadel Securities currently handles ~27% of U.S. equity trading volume, covering over 11,000 listed securities and 16,000 OTC instruments. After securing $1.15billioninfundingin2022\ast \ast ,itsvaluationreached\ast \ast$22 billion, with backers including Sequoia Capital and crypto VC Paradigm. In traditional finance, the firm processes 40% of U.S. retail trading volume daily—a liquidity management prowess that underpins its crypto ambitions.

Strategic Partnerships and Technical Edge

Citadel’s expansion plan hinges on three pillars:

1. Leveraging existing high-frequency trading (HFT) infrastructure for cross-market arbitrage.
2. Building compliance frameworks via Paradigm’s crypto industry resources.
3. Applying its 99% coverage rate in equity options market-making to crypto derivatives.

Its automated trading platform already manages market-making for 4,000+ listed option issuers, a capability poised to enhance crypto market pricing efficiency and liquidity depth.

Leadership and Strategic Vision

In the early 2000s, Griffin founded market maker Citadel Securities。CEO Peng Zhao, a quantitative trading expert with a BS in Mathematics from Peking University and a PhD in Statistics from UC Berkeley, spearheaded the firm’s digital transformation. Under his leadership, net revenue doubled from 2018 to $6.7 billion in 2020. Zhao emphasized that crypto’s institutionalization and 24/7 trading align perfectly with Citadel’s algorithmic trading strengths—a tech-driven approach likely to shape its crypto strategy.

Industry Impact and Outlook

Citadel’s entry may trigger the following shifts:

• Narrowing spreads between spot and derivatives markets.
• Reducing liquidity premiums for small/mid-cap tokens.
• Accelerating institutional crypto adoption.
• Upgrading cross-market clearing infrastructure.

Notably, its partnership model with EDX Markets balances compliance control and regulatory risk mitigation by segregating retail operations—a blueprint for traditional firms entering crypto.

Regulatory and Market Preparedness

With market-making giants entering, exchanges must upgrade APIs and risk systems to handle HFT flows, while regulators may tighten monitoring of cross-market manipulation. For retail investors, volatility may decline short-term, but tail-risk events could widen in scope. These structural shifts are redefining crypto’s ecosystem.