Source: Cointelegraph Original: "{title}"

Author: Mārtiņš Beķītis, Co-founder and CEO of Gravity Team Mārtiņš Beķītis

As the application of cryptocurrency stabilizes in some developed countries, emerging markets have taken the lead in cryptocurrency adoption. Southeast Asia, Africa, and Latin America have become rapidly growing centers, driven by limited banking options, unstable local currencies, and the increasing use of smartphones. There is a pressing demand for alternative finance in these regions. While blockchain technology can achieve this goal, the journey will certainly not be smooth.

A significant barrier in emerging cryptocurrency markets is the market makers, as traditional market-making methods struggle due to specific challenges such as limited infrastructure and economic instability. Standard market-making strategies often fail or do not adequately account for these complexities. A new approach known as "boutique market making" can unlock growth potential by providing tailored liquidity solutions that consider local factors such as regional regulations, cultural nuances, and specific pain points of each market.

This "boutique" approach will bring tremendous benefits to ordinary people in emerging markets, creating opportunities for them to access financial services for the first time, allowing them to take control of their economic futures.

The growth potential of emerging cryptocurrency markets is evident, but tapping into that potential is not easy. The path is fraught with challenges and requires a specialized and meticulous approach. Here, standard market-making strategies are largely ineffective.

In a country with constantly changing rules and a delicately fluctuating economy, navigating the regulatory maze requires careful consideration. This is the reality in Argentina. Strict capital controls create a technical minefield for cryptocurrency trading, necessitating around-the-clock monitoring and hyper-responsive strategies to ensure compliance. Why would liquidity providers be willing to deal with such uncertainty?

Then there are the technical issues. Many local exchanges are built on outdated infrastructure, resulting in high latency and delay rates. This is far from the seamless application interfaces and lightning-fast execution of the world’s top platforms. This leads to reluctance among traders and liquidity providers to participate, creating a vicious cycle of low order volume, persistent drought, and limited liquidity and opportunities.

Foreign exchange volatility complicates matters further. Severe fluctuations in some fiat currencies pose direct exchange risks. In many places, banking systems have comprehensively banned cryptocurrency-related transactions to protect customers from such volatility, resulting in settlement friction.

This series of issues has pushed people away from centralized banking towards the embrace of peer-to-peer trading, further decentralizing liquidity and making it difficult for localized cryptocurrency exchanges to develop. However, these technical barriers can be overcome. They simply require a market-making approach with a rich background, one that can keenly recognize every risk, issue, human need, and cultural factor.

Traditional market makers are accustomed to standardized protocols, making it difficult for them to adapt, leading to insufficient liquidity and failure. This is particularly evident in regions like Argentina and Turkey, where, despite Turkey having the highest global cryptocurrency adoption rate at 27.1%, followed by Argentina at 23.5%, local conditions demand customized solutions. These figures are significantly higher than the estimated global cryptocurrency ownership rate of 11.9%.

In Argentina, boutique firms can facilitate the liquidity of dollar-pegged stablecoins, providing a crucial lifeline for those in need of a stable peso alternative and capital controls. Even considering the provision of such services requires a deep understanding of local regulations and a proactive compliance approach.

In Turkey, price discrepancies between global and local platforms create significant inefficiencies. The intervention of boutique market makers acts as a bridge, eliminating inefficiencies and ensuring fairer prices for local traders.

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Take Bolivia, for example. Cryptocurrency was legalized in June 2024, and local exchanges quickly went live but lacked liquidity. Large companies were reluctant to engage with them. Suddenly, after the intervention of boutique market makers, slippage decreased, and prices stabilized, enabling investors of all sizes to trade. The ability to build trust and lasting relationships with local communities and regulators is crucial. A handshake must be reached.

Boutique market makers strive to provide stable liquidity, which in turn releases countless opportunities for people in emerging cryptocurrency markets. By offering stable buy and sell orders, they reduce slippage and price volatility, creating a reliable environment for developers to build tools, platforms, and decentralized applications based on local demand.

The stability provided by boutique market makers stems from their tailored strategies, leveraging local knowledge, navigating the regulatory maze, and bridging gaps in decentralized markets. This differs from standardized approaches, which often fail due to outdated technology or compliance barriers. For users, this means accessible, liquid markets that support practical cryptocurrency use from remittances to everyday transactions, thereby driving real-world adoption.

Emerging cryptocurrency markets are at a critical juncture. With their flexibility and local insights, boutique market makers are key to transforming potential into action and opportunity. Now is the time for stakeholders, exchanges, regulators, and communities to appropriately support these specialized participants to cultivate an innovative and thriving ecosystem that provides real opportunities for ordinary users. The future path lays the foundation for a decentralized economy that benefits everyone. To achieve this, liquidity is crucial.

Author: Mārtiņš Beķītis, Co-founder and CEO of Gravity Team: Mārtiņš Beķītis, Co-founder and CEO of Gravity Team.

This article is for informational purposes only and is not intended and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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