What is Conversion? How Financial Institutions can Engage with Digital Assets

minute read

As the world becomes more digitized, it's no surprise that traditional financial institutions are looking for new ways to engage with a growing digital asset market.

Digital assets present an enticing opportunity for these organizations because of their liquidity and 24/7 market access - critical factors in today's fast-paced marketplace.

But what is conversion

In simple terms, it is the act of exchanging one asset for another. For example, you could convert USD to any number of available digital assets. 

Or, you might even convert more traditional assets like stocks or bonds into digital assets.

Conversion is important for financial institutions because it allows them to lock in trading prices and settlements. It also provides accurate reporting data, which is essential for tracking progress and making informed decisions about the future.

While conversion might seem like a daunting task, it's actually quite simple when you break it down into its individual parts. By understanding the process and what's involved, financial institutions can start to engage with this new asset class in a more meaningful way.

In this article, we will discuss the concept of conversion when it comes to digital assets and dollar-denominated currencies. We will also touch on how financial institutions are looking for new ways to engage with a growing market.

Finally, we will write about concepts such as liquidity, full access to digital assets, locked-in trading, and accurate reporting. By the end of this article, you will understand the necessity of conversion when it comes to digital assets.

Digital Asset Conversion Defined

When financial institutions enter the digital asset market, they need to be able to trade digital assets quickly and easily. This process is known as conversion, and it allows these institutions to take full advantage of the 24/7/365 liquidity that cryptocurrencies offer.

Conversion can be defined as the act of exchanging one asset for another. When it comes to these digital assets, a few things need to be taken into consideration when converting assets.

Liquidity - the need to have ample liquidity available from multiple providers.

One of the most important factors in conversion is liquidity.

Liquidity refers to the ability of an asset to be bought or sold quickly and at a stable price. When there is high liquidity, it means that there are many buyers and sellers in the market and that trades can be executed quickly and at a fair price.

Liquidity is essential for financial institutions because they need to be able to trade large volumes of assets quickly and without affecting the market price.

To ensure ample liquidity, it's important to have multiple providers. This way, if one provider is not able to meet the demand, others can step in and fill the gap.

Multiple providers also provide redundancy in case of technical issues or unforeseen events.

For example, if one exchange goes down, there are others that can take its place. This ensures that trades can still be executed even in the most challenging circumstances.

Trade Bitcoin with the US Dollar

Full access to digital assets to consumers - 24/7 market access to digital assets.

Another important factor in conversion is offering consumers full access to digital assets. This means that they need to have 24/7 market access so that they can buy or sell whenever they want.

The ability to trade around the clock is a major advantage that cryptocurrencies have over traditional assets. It allows traders to take advantage of opportunities as they arise, regardless of what time it is.

This is a major benefit for financial institutions because it allows them to trade whenever they want without worrying about the market closing.

It also means that they can execute trades quickly without waiting for the market to open.

Locked-In trading - fully-transparent trade pricing and settlement execution.

Another important factor in conversion is offering locked-in trading. This means that financial institutions can trade with confidence - knowing that their price is fair and transparent.

Locked-in trading also allows for quick execution of trades, as there is no need to wait for the market to open or close.

This is a major benefit for financial institutions as it allows them to trade quickly and efficiently without worrying about the price of the asset. When consumers know that they are getting a fair price, they are more likely to trade.

It also builds trust between the financial institution and the consumer - making locked-in trading a win-win for both parties involved.

How Financial Institutions can Leverage Sequoir

If you are considering entering the digital asset market, Sequoir can help you get started.

Sequoir offers a wide range of services that can assist you getting involved with crypto, including:

At Sequoir, we are a leading financial technology firm focused on creating the tools that financial institutions need to engage with the digital asset market. 

With both our REST API or Web Platform models, you can begin to develop the infrastructure necessary to begin trading digital assets.

We provide everything you need to get started, including:

If you are looking for a way to get started in the digital asset market, contact our sales team. We would be happy to discuss how we can help you get started and get you down the road to success in tomorrow's digital economy.