Day 1: Capital Markets & Trade Leverage

The first credit market in crypto stemmed from the need for trade leverage. Nearly every trading desk in the industry is active in this market in some way, shape, or form today, which makes it challenging to estimate the actual size of the market, as many do not provide reporting on their activities.

According to a recent research report from CredMark, the crypto-collateralized lending market is estimated to originate over $10B in quarterly loan volume. Historically crypto loans have been collateralized with a highly liquid and readily saleable asset, bitcoin, and the level of risk was perceived to be low. However, this March, when bitcoin dipped 50% in a 24-hour period, these parameters were tested. Discussion topics include trade leverage, margin and clearing, risk management, and rate markets.

Opening Remarks

Meltem Demirors of CoinShares provides opening remarks, based a recent blog post titled "Understanding Crypto Credit Markets"

Capital Markets and Trade Leverage

In this session, we talk to some of the leading trading firms in the industry about the evolution of crypto capital markets, the early days of trade leverage, and how the institutional financing space has evolved.

Rate Markets

Just like traditional credit markets, different types of risk (duration, collateralization level, creditworthiness of borrowers, etc) command different market rates. And just like traditional markets have a yield curve, crypto markets are creating their own yield curves. In this session, we hear about the growing rate market and how different firms are building strategies around rates.

An Explosion of Crypto Credit

In fiat economies, debt is the Mother of All Markets. The relatively nascent world of cryptocurrencies wonโ€™t be considered a fully-actualized market until functional credit markets are active in size. But thatโ€™s beginning to happen. At the end of Q2, total active crypto debt outstanding was $5.2B, and significantly growing QoQ. In this exclusive Fireside Chat, we learn about what this continuing maturation means for crypto as a mainstream asset class in years to come.

  • Zac Prince, Blockfi
  • Donna Redel, Board Member at New York Angels, former chairwoman COMEX

Margining and Risk Management

Clearing and margining is an important step in the trade lifecycle, and allows traders to increase liquidity and financing capabilities through reduced initial margin requirements, fewer margin variations, and smaller net settlements. In crypto, clearing, margining, and risk management are nascent and there is no ISDA-like entity that can be relied on in case of disputes between broker and trader, and no entity like the OCC that provides cross-margining for efficiency of collateral in the market. In this session, weโ€™ll hear more about the emergence of clearing and margining venues and how they can help drive better risk management in the trading ecosystem.


Some of our favorite moments from Day 1