According to Nathan Sage, CEO of Sage Capital Management, FX brokers are among the best positioned firms to compete seriously in digital assets. They already understand liquidity, margin, execution and risk management. However, crypto markets are structurally different. To succeed, brokers need more than sophisticated FX knowledge. They need to combine this with ‘crypto fluency’ and crypto specific infrastructure. Nathan explains what FX brokers need to know about crypto and how to maximise the growing opportunities in digital assets.
Briefly describe your business
Sage Capital Management provides an end-to-end operating system for digital assets, enabling institutional clients to manage banking, liquidity, capital and technology within a single integrated platform.
We built the business to address the pain points of fragmentation and operational inefficiencies that I experienced when I was running a large Bitcoin hedge fund. We initially created our own private broker which enabled us to have direct relationships with market makers. We built our own tech stack, and then addressed other areas of complexity such as liquidity management, credit and banking. Having reduced hard operational costs by over 40% for ourselves, we evolved the business to become a regulated counterparty, and we now offer our fully integrated crypto infrastructure to other institutional firms, helping them to reap similar benefits.
What are the biggest pain points that you are addressing?
Most FX brokers entering crypto find themselves running five or more separate counterparty relationships: a bank, a liquidity provider, a trading platform, a prime broker and a lender. Each one is siloed, each one introduces risk, each one adds cost, and each is a time-consuming operational overhead and an area that needs managing separately. We replace this fragmented model with a single account, one regulated counterparty and one operating system. This removes inefficiencies across the trading lifecycle and significantly reduces operational risk.
Banking is a widely felt pain point in digital assets, with fragmented accounts, slow settlement and friction between FIAT and crypto markets. We address this through our integrated private banking solution connected to Tier 1 global payment rails. Clients can have named, multi-currency accounts under their legal entity and can send and receive payments globally, just like a traditional bank account, but directly connected to digital asset markets. This has been a game changer for many of our clients.
Other than the trading hours, what are the biggest differences FX brokers need to be mindful of when moving into crypto?
The most important difference is how crypto markets behave under stress. In FX, volatility widens spreads but liquidity remains. In crypto, liquidity can disappear entirely. Providers are not obligated to stream prices and may withdraw without warning, leaving brokers exposed.
There is also exchange-driven auto-liquidation. Positions can be closed automatically to generate liquidity – even if they are not materially loss-making. This is unfamiliar to many FX professionals and can create significant financial and reputational risk.
Sage Capital Markets aggregates liquidity across more than 40 venues through a single counterparty. This ensures continuity even when individual providers go offline, enabling clients to maintain execution quality in volatile conditions.
What strategic mistakes do FX brokers commonly make when entering crypto?
Over-reliance on internalisation is one of the most common mistakes. In FX, internalising flow is a key profit driver. In crypto, due to volatility and fragmented liquidity, this approach carries significantly higher risk. Without deep external liquidity, losses can escalate quickly.
Another common mistake is underestimating settlement complexity. Crypto settles in real time on-chain, but each venue operates differently. Managing this across multiple platforms introduces operational challenges that many systems are not designed to handle.
If brokers are already up and running with a crypto offering, how should they assess how robust their operations are?
Brokers should ask themselves three questions:
- How many counterparty relationships does your current digital asset operation depend on? And what happens if two fail simultaneously?
- How much capital do you have prefunded across various providers? And what return is it generating while it sits there?
- If your primary liquidity provider stops streaming in a volatile market, how quickly would you know? And what is your response plan in the first 30 minutes?
If they are comfortable with all three answers, their infrastructure is probably in good shape. If not, they definitely need to review it.
Nathan Sage is CEO of Sage Capital Management. Find him on LinkedIn where he is sharing a series of videos about how FX brokers can address the pain points of offering crypto trading to clients.
