According to Blockworks, Flowdesk, a crypto market-making and over-the-counter trading service provider, has raised $50 million in Series B funding. The funding round was led by the venture arm of Cathay Capital and included participation from Cathay Ledger Fund, Eurazeo, ISAI, Speedinvest, BPI, and Ripple. Flowdesk, in collaboration with Jane Street, Virtu, and Flow Traders, serves as one of the four liquidity providers for Grayscale's recently approved spot bitcoin ETF. Liquidity providers regulate the buying or selling of bitcoin, contingent on investors creating or redeeming shares of the ETF. This process ensures that the ETF's price tracks bitcoin's, offering investors a more accessible and regulated way to participate in bitcoin trading without the need to directly own the digital currency.
Unlike in traditional crypto trading, bitcoin ETF shares don't settle the same day, and all trades have to be pre-funded by liquidity providers, according to Flowdesk CEO Guilhem Chaumont. This pre-funding requirement means that liquidity providers, like Flowdesk, must allocate funds in advance to cover the trades, reducing the risk of default and aligning with the more regulated and structured approach typical of traditional financial markets. Although the fundraise announcement comes in the immediate aftermath of spot bitcoin ETF approval, Flowdesk's term sheet was signed in mid-2023, and the round closed near the end of last year, Chaumont said.
Flowdesk previously raised $30 million in a Series A round in June 2022. Chaumont declined to disclose how much of Grayscale's spot bitcoin ETF trading volume Flowdesk was responsible for but said each of the liquidity providers handles a "substantial share."