What a Broker‑Dealer Model Means for Digital Assets
Overview
The broker‑dealer (BD) construct separates client order handling from principal risk‑taking. In digital assets, BD processes bring transparency, recordkeeping, and investor protections.
Key Principles
- Agency duty and conflicts management
- Best‑execution oversight and venue due diligence
- Books & records / communications supervision
- Segregation of duties
Operational Model
BD connects to multiple venues and custodians with policy‑driven routing. Reconciliation and evidence capture reduce operational risk.
Benefits vs Exchange‑only
- Reduced conflicts from internalization
- Clear accountability & disclosures
- Compatibility with institutional controls
Implementation Notes
- Define routing & counterparty policies
- Integrate custody and approvals
- Establish evidence capture for audits