Cryptocurrency market makers are collectively seeking change, with profits becoming increasingly difficult to secure

Original author: momo, ChainCatcher

This year, established crypto market maker GSR has been making frequent moves.

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

Prior to this, it had already completed several key maneuvers: acquiring two token advisory firms in March, co-launching a crypto ETF on Nasdaq in April, and investing in tokenization platform Libeara, followed by introducing a strategic investment from Standard Chartered's SC Ventures in May.

What is the underlying strategy behind GSR's intensive actions? What collective moves are other crypto market makers making?

From Crypto Market Making to a "Web3 Investment Bank"

As early as 2025, GSR CEO Xin Song positioned the company as a "crypto capital markets platform," frequently mentioning its evolution towards a "Web3 investment bank."

He also discussed the rationale for this transformation. In his view, the problem for crypto projects has never been isolated to a single step, but rather the entire chain is fragmented. For example, token design, fundraising, listing, and liquidity arrangements require coordination with different institutions, each with misaligned objectives, leading to high coordination costs. Therefore, they aim to consolidate services surrounding the token lifecycle into a single system as much as possible.

Towards this goal, starting last year or even earlier, GSR has been filling capability gaps through licensing, acquisitions, and investments.

In early 2025, GSR obtained registration with the UK FCA, entering a regulated framework. Subsequently, it acquired Equilibrium Capital Services, a FINRA-registered broker-dealer in the U.S., and after completing regulatory approval this year, renamed it GSR Securities. This step signifies more than just adding a compliance identity; it provides GSR with the interface capability to access traditional capital markets.

Beyond licensing, GSR has also begun extending its services to earlier stages, specifically the issuance process.

In March this year, it acquired Autonomous and Architech for $57 million. The former focuses on foundation operations and fundraising coordination, while the latter specializes in token economic design and liquidity strategy.

Post-merger, the entire chain from token design, fundraising, and listing to market making begins to be streamlined. Previously scattered across different institutions, these processes are now gradually being integrated into a single service system.

However, a more critical shift is the extension of services from "how to issue tokens" to "how to manage assets."

In public interviews, GSR mentioned that many foundations and protocols hold large quantities of their own tokens early on but lack mature financial systems to manage these assets. This results in highly concentrated, extremely volatile holdings, making it difficult to establish stable funding sources. Consequently, they are progressively expanding into asset management.

Beyond helping crypto enterprises build crypto treasuries last year, GSR has started launching ETF funds this year.

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

Simultaneously, GSR is also betting on the tokenization trend.

This year, it invested in Libeara, incubated by Standard Chartered's SC Ventures. This platform already supports over $1 billion in on-chain asset issuances and holds relevant licenses from Singapore's MAS. Interestingly, shortly after this investment, SC Ventures made a reciprocal equity investment in GSR, becoming its first external strategic shareholder since its founding in 2013.

This cross-shareholding deepens the relationship from business cooperation to capital ties, granting GSR more direct access to banking systems, institutional networks, and compliant channels.

In public disclosures, GSR has also mentioned engaging with tokenization needs for various assets, including film studios, farmland, real estate, and accounts receivable.

From licensing and compliance capabilities, through advisory, issuance, and market making, to asset management and secondary liquidity, GSR is systematically assembling the pieces of 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 change sweeping through the crypto market-making industry.

Over the past year, the actions of top market makers have shown a clear convergence. On one hand, they continuously strengthen compliance and licensing frameworks; on the other, they relentlessly expand beyond core market-making activities.

For example, Keyrock, while entering the U.S. market and establishing a New York office, is also advancing its compliance strategy under the EU's MiCA framework and entering asset management by acquiring a fund management company. B2C2 obtained MiCA authorization, expanding its business into more complex institutional OTC and stablecoin exchange scenarios. Wintermute, beyond enhancing its institutional trading capabilities, is venturing into new areas like prediction markets, DeFi vault curation, and tokenized gold trading. DWF Labs is also attempting to extend its role from liquidity provision towards real-world assets, including gold trading and physical delivery.

Crypto market makers seem to be following a similar path: first entering mainstream regulatory systems through licensing and geographical expansion, then penetrating the institutional market with OTC and institutional liquidity as core business, followed by a gradual expansion into asset management, tokenized assets, and more complex financial products.

The deep-seated driver behind this is likely the industry's transition from high-profit margins to a state of intense competition and low error tolerance.

Firstly, "the money has shrunk." With the decline of altcoins and the bear market, project market-making budgets have also dropped significantly. Project teams themselves have become savvier. After experiencing several cycles, they have a better understanding of market-making mechanisms and profit margins.

Furthermore, there are "too many cooks in the kitchen." Fewer projects are worthy of market-making services, yet the number of market makers has increased. The result is that high-quality liquidity is increasingly concentrated among a few top-tier teams, while numerous long-tail projects are neither profitable nor offer growth potential. Many market makers are essentially competing for limited returns within an increasingly narrow band, squeezing marginal space paper-thin.

At the same time, competition is expanding outward. New arenas like on-chain market making, derivatives, and tokenized assets are constantly emerging, causing the landscape for crypto market makers to differentiate as the number of tracks increases. Market makers are now expected to possess more systematic capabilities.

More difficult to ignore is the pressure from compliance and risk events. Regulation is tightening rapidly. With the gradual implementation of frameworks like the U.S. and EU's MiCA, licenses and audits have become basic prerequisites, not competitive advantages. Coupled with extreme market events like the one on October 11th last year, this directly reinforces the realization that teams without systemic risk management capabilities will eventually be weeded out.

In summary, the profit model for the crypto market-making business has changed. The role of the crypto market maker appears to be evolving from a trading industry reliant on information asymmetry and volatility into an institutional industry reshaped by compliance, client structure, and asset forms.