Coinbase’s public filing with the Securities and Exchange Commission (SEC) has set the standard when it comes to disclosure and risk for any other crypto businesses thinking about going public, according to the CEO of the largest institutional crypto exchange.

With its public filing, Coinbase has issued minimum viable standards for methods of operation, risk management and risk awareness in crypto, said David Mercer, CEO of London-based LMAX Group.

“It's gutsy to go and be listed in the U.S., with all the nefarious chatter about bitcoin and all the AML (anti-money laundering) procedures,” said Mercer in an interview. “I think if anyone else is considering it, if your policies and procedures and controls aren't at least up to that standard, you've got no chance.”

Retail crypto exchanges with about 10 million customers should be thinking about how they can meet that standard and go beyond it to differentiate themselves, Mercer added. 

The arrival of institutional crypto has been one of the big themes in the last year or so. LMAX Digital has recorded over $5 billion in daily institutional crypto trading volume at times; earlier this week the exchange clocked close to $4.4 billion in daily volume. 

According to its S-1 filing, Coinbase has aggressively expanded beyond retail trading to now accounting for close to 50% of its volume from institutional. (According to its S-1 document Coinbase has 7,000 institutions.) 

Mercer pointed out the financial definition of an institution is a firm like Jump Trading or Cumberland, of which his firm has 400 such clients, and that could be narrowed down to 100 if you are talking about banks.

“That's one thing I'm gonna pick them up on,” Mercer said. “How do you define an institution? I think one man's one man's institution is another man's private investor.”

However, he acknowledged the crypto world makes such definitions fluid, adding that Coinbase is, to some degree, setting the rules. 

However, one important factor that isn’t up for negotiation is no down time, said Mercer, pointing out that LMAX Group has had zero down time in seven years. Mercer's comment was no doubt a criticism of Coinbase's tendency last year to experience outages during periods of unusually heavy volume.

“There's an acceptance in the retail market that they have downtime when things get busy,” Mercer said. “Institutions expect 100% uptime. I can’t tell bank A in Chicago and say, ‘sorry guys, we’ve been really busy and just down here for a few minutes.’ They'll just pull my line and not trade with me.”