As institutional participation in digital assets continues to grow, cracks in crypto market structure are becoming harder to ignore. Market manipulation concerns, fragmented regulation, uneven liquidity, and persistent security risks remain barriers for sophisticated investors seeking reliable execution at scale. At the center of these challenges is the dominant Central Limit Order Book (CLOB) model; long considered standard across exchanges, yet increasingly questioned for its ability to deliver fair, transparent, and efficient execution in volatile, multi-venue crypto markets. 

Crossover Markets operates CROSSx, the industry’s first execution-only crypto ECN with fungibility, allowing institutions to buy assets on one venue and sell on another. Brandon Mulvihill, Co-Founder and CEO, offers a market-structure perspective on what’s broken and what needs to change.  

CM: From an institutional standpoint, what are the biggest structural needs in today’s crypto trading ecosystem? 

BM: The two largest needs are bank-led custody and U.S.-based regulation. Institutions tend to custody their assets at a bank they know and trust, and as such, they will trade across asset classes, generally keeping their assets in one or two custody banks. Therefore, the industry’s largest catalyst will be when established institutions offer crypto custody, unlocking entry for the world’s biggest players. 

Secondly, the last major development will be U.S. regulation, namely around market structure. We are nearing the successful conclusion of an agreement that will establish a national framework and provide clarity for all stakeholders. Ultimately, the combination of U.S. regulatory clarity and bank-led custody is expected to a) further drive institutional volumes in the OTC markets and b) generate volumes significantly higher than current levels.  

CM: Why has the traditional CLOB model struggled to address issues like market manipulation and information asymmetry in crypto markets? 

BM: The CLOB execution model does not distinguish between liquidity providers and clients. Rather, all participants interact as clients within one pool of liquidity. This model creates an obvious conflict of interest, as liquidity providers who generally make markets can also take liquidity from the exchange, thus competing directly with retail consumers.  

For example, if BTC were to fall by 40% in a matter of minutes, it would be the institutional liquidity providers who exit risk first, as they have much faster technology than the retail user, who is likely simply using their smartphone. Consequently, in any sudden or chaotic market move, retail investors bear the cost, and often a premium on losses, because the CLOB model does not distinguish between liquidity providers and consumers.  

No other financial market operates this way. In FX, brokers facilitate trading between the liquidity providers making markets and retail clients. However, the liquidity providers cannot – technically nor operationally – take liquidity from the system. Similarly, in equities, market makers price retail brokers and specifically have to price under NBBO rules, thus ensuring a fair price. Again, the liquidity provider is not granted the ability to have a corporate account that also takes liquidity from the retail clients.  

CM: How important is low-latency execution for crypto compared to traditional asset classes? 

BM: Speed is everything, and it matters because it plays an important role in market quality. For example, market makers using CROSSx, the industry’s first ECN and first-ever execution-only trading venue, can process significantly more price updates within the same time interval compared to some major exchanges. While certain platforms highlight execution speeds in the millisecond range, CROSSx operates at substantially lower latencies, allowing market makers to adjust quotes more frequently as market conditions change.  

This ability to update prices more often can contribute to tighter spreads, as liquidity providers are better positioned to manage risk and reflect real-time market movements. For traders, faster infrastructure can translate into more competitive pricing and improved execution quality. 

As the market matures, we also expect takers of liquidity will continue to demand faster execution times. For institutions looking to lay off risk with little to no market impact, they need to quickly show their interest and find out quickly if it’ll go through. 

CM: Are you seeing a shift away from vertically integrated exchanges (that combine trading, custody, and sometimes market-making) toward more unbundled models?   

BM: Absolutely. The U.S. market saw the birth of ETFs and a regime change that took a positive stance on crypto. These factors have resulted in a sizeable influx of institutions entering the market, or at the very least, working very hard to enter it soon. Traditional financial institutions demand separation of duties, namely because they demand lower fees, both in cost of capital and cost of execution. The vertically integrated exchanges are effectively brokerage models that hold all clients captive, and as such, they can charge higher fees.  

Historically, the few institutions in the crypto market tolerated this because there was no other supply chain. However, for example, with Hidden Road being acquired by Ripple, there’s now an OTC prime broker backed by a massive balance sheet. In 2025, we saw institutions moving away from exchange trading to OTC, and post-October 10th this magnified materially as many realized the risks of combining execution and credit, which can lead to disastrous results if the technology fails. 

CM: What regulatory clarity would most immediately improve institutional participation? 

BM: Certainly the Market Structure Bill, which was more than just a legislation, but a turning point for crypto markets. This bill sets out a unified, national framework, and clarifies the regulatory requirements for various activities, such as market making, custody, execution (DCE), and exchange operation. Importantly, it provides a pathway for self-registration while the final framework is being developed, removing the need for firms to navigate a patchwork of state licenses by providing a streamlined, nationwide path to compliance. 

CM: What needs to happen at the market-structure level for crypto to reach the same institutional maturity as FX or equities? 

BM: Crypto has been, from a market structure standpoint, quite immature. For crypto to reach that same level of maturity, it needs to operate and behave like foreign exchange, which, like crypto, is inherently international. Factually speaking, the path to universality lies in separating custody, clearing, and execution. This separation reduces trading costs, capital costs, and execution fees through greater efficiency and competition, offering a key explanation for why crypto volumes have stagnated. 

Additionally, to reach a higher level of institutional maturity, crypto will require more competition in the custodial space, potentially through the entry of banks, and more competition in the prime brokerage space for the crypto market to scale. 

CM: How do you see crypto trading infrastructure evolving over the next three to five years?  

BM: We’ve reached a tipping point where institutional investors have increasing opportunities in the U.S. crypto market, and as a result, institutional cryptocurrency trading is starting to scale. We are seeing crypto trading infrastructure evolving toward more institutional-grade models. We’re seeing a focus on lower latency, clearer separation of execution from custody, and market structure practices borrowed from traditional finance. As regulatory clarity improves and institutional participation grows, trading venues will need to support more robust execution, clearing, and custody functions, all while maintaining top tier performance and reliability.