Crypto market makers are collectively seeking change, as it's getting harder to make money

Original Author: momo, ChainCatcher

Since the beginning of 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 FINRA in the US, allowing it to participate in the trading and brokerage of securities-class digital assets under a US compliance framework.

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

What is GSR's strategy behind these intense actions? What collective moves are other crypto market makers making?

From Crypto Market Making to "Web3 Investment Banking"

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

He also outlined the reasons for this transformation. From his perspective, the problem for crypto projects has never been just one aspect, but the fragmented nature of the entire chain. For example, token design, fundraising, listing, and liquidity arrangements require engaging with different institutions, whose objectives often misalign, leading to high coordination costs. Therefore, their goal is to consolidate services around the token lifecycle into a single system.

Pursuing this direction, GSR has been continuously building its capabilities through licenses, acquisitions, and investments since last year, or even earlier.

In early 2025, GSR obtained registration with the UK's FCA, entering a regulated framework. It subsequently acquired Equilibrium Capital Services, a FINRA-registered broker-dealer in the US, rebranding it as GSR Securities after regulatory approval this year. This move is not merely about gaining a compliance identity but equipping it with the interface to access traditional capital markets.

Beyond licenses, GSR has begun extending its services to earlier stages of issuance.

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 strategies.

Post-merger, the entire chain from token design, fundraising, and listing to market making is beginning to be connected. Previously, these stages were often handled by different entities, but now they are gradually being integrated into a unified service system.

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

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

Besides assisting crypto enterprises in building crypto treasuries last year, GSR has now started launching ETF funds.

In April this year, GSR launched its first ETF, the GSR Crypto Core3 ETF, which combines 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 has already supported over $1 billion in on-chain asset issuance and holds relevant licenses from Singapore's MAS. Interestingly, shortly after this investment, SC Ventures made a reciprocal equity investment in GSR, making it GSR's first external strategic shareholder since its founding in 2013.

This cross-shareholding transforms their relationship from mere business cooperation to capital binding, giving GSR a more direct connection to the banking system, institutional networks, and compliance channels.

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

From licensing and compliance capabilities to advisory, issuance, market making, asset management, and secondary liquidity, GSR is attempting to piece together the puzzle of a "Web3 investment bank."

Collective Transformation of Crypto Market Makers

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

Over the past year, the actions of top market makers have shown a clear convergence. On one hand, they continue to strengthen compliance and licensing systems; on the other, they persistently expand beyond traditional market-making operations.

For instance, while entering the US market and establishing a New York office, Keyrock is also advancing its compliance layout under the EU's MiCA framework and entering asset management through the acquisition of a fund management company. B2C2 obtained MiCA authorization to expand its business into more complex institutional OTC and stablecoin exchange scenarios. Wintermute, while strengthening institutional trading capabilities, is also entering new areas like prediction markets, DeFi treasury curation, and tokenized gold trading. DWF Labs is also attempting to extend its services 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 licenses and geographical expansion, then penetrating the institutional market with OTC and institutional liquidity as core services, followed by gradual expansion into asset management, tokenized assets, and more complex financial products.

The underlying driving force is likely the industry's shift from high profitability to intense competition and low margin for error.

Firstly, "the money is shrinking." With the decline of altcoins and the bear market, project market-making budgets have also decreased significantly. Projects themselves have become smarter. After multiple cycles, they have a better understanding of market-making mechanisms and profit margins.

Furthermore, "there are too many players chasing too few opportunities." Fewer projects are worth market-making for, while the number of market makers has increased. Consequently, high-quality liquidity is increasingly concentrated among a few top teams, while a vast number of long-tail projects are neither profitable nor offer growth potential. Many market makers are effectively competing for limited returns in an increasingly narrow space, squeezing their marginal profits thin.

At the same time, competition is expanding outwards. New tracks like on-chain market making, derivatives, and tokenized assets are constantly emerging. This diversification of tracks is leading to a fragmentation among crypto market makers, who are now required 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 the US and EU MiCA frameworks, licenses and audits have become baseline requirements, not competitive advantages. Events like the extreme market conditions on October 11 last year reinforce a crucial understanding: teams without systematic risk management capabilities will inevitably be weeded out.

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