Cryptocurrency market makers collectively seek change as it becomes increasingly difficult to make money

Author: flowie, ChainCatcher

Since the beginning of this year, the established crypto market maker GSR has been very active.

Recently, GSR announced the completion of its acquisition of SEC-registered broker Equilibrium Capital Services, renaming it GSR Securities. This means that GSR has obtained a broker-dealer license regulated by the U.S. FINRA, allowing it to participate in trading and brokerage services for securities-type digital assets within the U.S. compliance framework.

Prior to this, it had already completed several key initiatives: in March, it acquired two token consulting firms; in April, it jointly launched a crypto ETF on Nasdaq; and in May, it brought in a strategic investment from Standard Chartered Bank's SC Ventures.

What strategy is GSR pursuing behind these intensive actions? What collective actions are other crypto market makers taking?

From Crypto Market Making to "Web3 Investment Banking"

As early as 2025, GSR CEO Xin Song positioned the company as a "crypto capital market platform" and has repeatedly mentioned its evolution towards a "Web3 investment bank."

He also mentioned the motivations for this transformation. In his view, the issues faced by crypto projects are never just a single link but rather a fragmented entire chain. For example, from token design, financing, listing, to liquidity arrangements, different institutions need to be connected separately, and their goals are often not aligned, leading to high coordination costs. Therefore, they prefer to consolidate services around the token lifecycle into a single system as much as possible.

In line with this direction, GSR has been continuously enhancing its capabilities through licenses, acquisitions, and investments since last year or even earlier.

At the beginning of 2025, GSR obtained registration with the UK's FCA, entering a regulated system. It then acquired the U.S. FINRA-registered broker-dealer Equilibrium Capital Services and completed regulatory approval this year, renaming it GSR Securities. This change not only adds a compliant identity but also equips it with the capability to interface with traditional capital markets.

Beyond licenses, GSR has also begun to move its services earlier into the issuance phase.

In March of this year, it acquired Autonomous and Architech for $57 million, with the former focusing on foundation operations and financing coordination, and the latter on token economic design and liquidity strategies.

After the merger, the entire chain from token design, financing, to listing and market making began to be connected. In the past, these links were often scattered among different institutions, but now they are gradually being integrated into the same service system.

However, the more important change is that services are beginning to extend from "how to issue tokens" to "how to manage assets."

GSR mentioned in public interviews that many foundations and protocols hold a large amount of their own tokens in the early stages but lack a mature financial system to manage these assets, resulting in highly concentrated assets, significant volatility, and difficulty in forming stable funding sources. Therefore, they are also gradually expanding into asset management.

In addition to helping crypto companies build crypto treasuries last year, GSR has also started launching ETF funds this year.

In April of this year, GSR launched its first ETF, the GSR Crypto Core3 ETF, which includes Bitcoin, Ethereum, and Solana in a unified portfolio and generates returns through a staking mechanism.

At the same time, GSR is also betting on the direction of tokenization.

This year, it invested in Libeara, incubated by Standard Chartered Bank's SC Ventures, which has already supported the issuance of over $1 billion in on-chain assets and holds relevant licenses from Singapore's MAS. Interestingly, shortly after this, SC Ventures also made a reverse investment in GSR, becoming its first external strategic shareholder since its establishment in 2013.

This mutual shareholding has transformed the relationship from business cooperation to capital binding, enabling GSR to have a more direct connection to the banking system, institutional networks, and compliance channels.

In public information, GSR also mentioned that it has already engaged with various asset tokenization needs, including film studios, farmland, real estate, and accounts receivable.

From licenses and compliance capabilities to consulting, issuance, market making, asset management, and secondary liquidity, GSR is attempting to gradually complete the "Web3 investment bank" puzzle.

Collective Transformation of Crypto Market Makers

GSR is not an isolated case of transformation but rather a microcosm of the collective transformation of crypto market makers.

In the past year, leading market makers have begun to show significant convergence in their actions, on one hand continuously strengthening compliance and licensing systems, and on the other hand, extending their business beyond market making.

For example, Keyrock has established a New York office while entering the U.S. market and is also advancing compliance under the EU MiCA framework, entering the asset management business through the acquisition of a fund management company; B2C2 has obtained MiCA authorization, expanding its business into more complex institutional OTC and stablecoin exchange scenarios; Wintermute has begun to enter new fields such as prediction markets, DeFi vault curation, and tokenized gold trading while strengthening institutional trading capabilities; DWF Labs is also attempting to extend from liquidity provision to real-world asset directions, including gold trading and physical delivery.

Crypto market makers seem to have formed a similar path, first entering the mainstream regulatory system through licenses and geographic expansion, then cutting into the institutional market with OTC and institutional liquidity as core businesses, and gradually extending into asset management, tokenized assets, and more complex financial products.

The underlying driving force may be that the crypto market maker industry is transitioning from high profits to a highly competitive, low-margin environment.

First, "money has become scarcer." With the decline of altcoins and a bearish market, project market-making budgets have significantly decreased. Project parties have also become smarter. After experiencing multiple cycles, they have a better understanding of market-making mechanisms and profit margins.

Moreover, "there are more monks than meat," with fewer projects of market-making value and more market makers. The result is that quality liquidity is increasingly concentrated in a few leading teams, while a large number of long-tail projects neither make money nor have growth potential. Many market makers are actually competing for limited returns in an increasingly narrow range, with marginal space being squeezed very thin.

At the same time, competition is also expanding outward. New tracks such as on-chain market making, derivatives, and tokenized assets are emerging, causing the landscape of crypto market makers to begin to differentiate due to the increase in tracks, requiring market makers to possess more systematic capabilities.

What cannot be ignored is the pressure brought by compliance and risk events. Regulation is tightening rapidly, and after the gradual implementation of the U.S. and EU MiCA systems, licenses and audits have become basic thresholds rather than added advantages. Coupled with extreme market conditions like those on October 11 last year, it reinforces the understanding that teams without systematic risk control capabilities will eventually be washed out.

In summary, the way to make money in the crypto market-making business has changed. The role of crypto market makers seems to be transitioning from a trading industry reliant on information asymmetry and volatility to an institutionalized industry reshaped by compliance, client structure, and asset forms.