Day 3: Beyond Crypto - The Evolution of Credit Markets


While over-collateralized and fully collateralized loans have taken off in every part of the crypto ecosystem, from most regulated to least, from Wall Street to far-flung corners of the internet, our winding path has led us back to the sweet, sweet nectar of risk. Enter under- and un-collateralized lending. As crypto credit markets continue to grow and mature, so do the methodologies for managing and selling risk in the form of credit scoring, underwriting, and more.

In addition, firms are building new investment products and services leveraging these new credit markets, and attracting new types of capital to the industry. Crypto collateralized lending rates are not that much higher than other types of corporate debt, and in some instances, crypto firms can actually access debt at better rates than other types of technology startups. Discussion topics include the evolution of credit scoring, evolving beyond FICO, stablecoins, and delivering yield in a ZIRP environment.


TALK: The Evolution of Credit Scoring | 4:30 – 4:45 pm

Credit data is big business, and investors are looking at new business models re-building credit scoring and credit data in new ways. Jill Carlson will discuss the evolution of credit scoring and new businesses being built both within the FICO construct and outside.

Credit Scoring – Evolving beyond FICO | 4:45 – 5:15 pm

The credit score of an individual standardizes their riskiness as a borrower and is therefore used to dictate the rate at which they can borrow. High risk equals higher rates. By papering a lot of legal contracts, gathering data, and creating avenues for legal recourse, such as wage garnishment or property seizure, lenders can mitigate the scale of loss and increase the probability of recovering some portion of assets. It would not be in the spirit of crypto, however, to replicate the same institutions of the past to build solutions for the future. In this session, we’ll hear about some of the innovative approaches that crypto teams are taking to bring credit scoring into the 21st century.

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Stablecoins – Disrupting Correspondent Banking | 5:15 – 5:45 pm

At the end of Q3, the aggregate supply of stablecoins was nearly $20B, almost double the $12B supply from a quarter prior. These digital representations of fiat currencies (primarily dollars) are being used in a variety of ways all over the world – from institutional trading to savings and remittance in third world countries. Join this session for an overview of the explosion of stablecoins and how they could be poised to disrupt the correspondent banking system over the coming years.

Panelists:

Chicago Meets Crypto: The DeFi Alliance | 5:45 – 6:15 pm

The DeFi Alliance is an international trade association created for decentralized financial market professionals to connect, collaborate and convene to celebrate the emergence of a healthy global DeFi ecosystem. We'll hear from members of this organization which convenes decentralized financial platforms, mainstream financial institutions, regulators, policymakers, and lawyers to share knowledge, develop thought leadership studies, build collaborative initiatives and celebrate the impact that DeFi innovations help to bring to the world. (note: CoinShares is a proud member of the DeFi Alliance!)

Delivering Yield in a ZIRP Environment | 6:15 – 6:55 pm

After the Global Financial Crisis, the federal funds rate was set at 0% for more than 7 years until the Federal Reserve slowly began raising it in 2016. When the COVID-19 crisis hit earlier this year, though, the Fed was forced to bring rates back down to zero where they could hold them for years. This presents a serious challenge for investors that have significant portions of their portfolios allocated to fixed income assets that are supposed to deliver yield. In this session, we’ll explore innovative new ways that crypto investors can get the yield that they’ve become so starved for in traditional markets.

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Some of the Magical Moments from Day 3