Enclave Market is launching what it says is the first fully confidential crypto trading service, allowing for large transactions that do not affect market prices.
The institutional exchange’s Enclave Cross system is designed to execute block trades at a given price without information leaking out to other market participants, similar to the way dark pools work for large equity transactions.
“In the same way that you log into your bank account or anything that’s secure, you’re using a unique set of credentials,” says David Wells, CEO of San Francisco-based Enclave. “The user name and password is protected by encryption.
“It’s a highly complex mathematical formula that would be impossible to guess or predict,” he continues. “And we’re using a similar implementation of encryption, but it hasn’t been used in this manner before.”
The system allows participating traders to move assets into its Secure Enclave, where orders are matched with interested counterparties.
“This helps to address the time mismatch that can result from a large trade, which can lead to slippage, information leakage and technical signals in the market,” according to the company.
The over-the-counter dark pool tested early stages of the service with institutional trading firms and prime brokers such as LedgerPrime.
“We are strategic partners to Enclave, meaning we held through the testing process before the product went live,” says Laura Vidiella, vice president of business development and strategy at LedgerPrime and advisor to Enclave Markets. “From there, we’re also going to help with the initial test in production and try to see also how we can provide liquidity.”
While one of the selling points of crypto is full transparency, Enclave Markets thinks there’s room for those who aren’t willing to disclose their positions to the entire market.