The crypto ecosystem has gone a long way since the implosion of the FTX of Sam Bankman Fried destroyed billions of investors in 2023. However, the industry as a whole needs to become more Balles, Tradfi experts told the “view of Wall Street at Crypto event” was held on Wednesday at the Hong Kong consensus.
“You have traditional players who have entered space now, especially for us, most of our exchanges occur from the exchange colony, where you really keep your assets on the goalkeepers while you can exchange exchanges” , Gautam Sharma, CEO and Cio Cio and Cio de Brevan Howard said. “Thus, technology has taken front in terms of the last 18 months since then, [but] There is more work to do. “”
Sharma underlined the need for 24/7 risk management, including market, counterpart and credit risks.
The counterparty risk refers to the possibility that a part involved in a transaction does not comply with its obligation, leading to a loss for the other party. This type of risk is higher in crypto than in traditional finance, given the absence of intermediaries such as banks or carications which guarantee confidence and colonies, and it is a cause for actors of Directional and non -directional arbitration.
“When we make arbitration, the risk of counterpart is the most important,” said Fabio Frontini, founder of Abraxas Capital Management, adding that credit risk is also very important.
Frontini stressed the importance of simulating stress test scenarios, referring to the perpetual term market where users can lose their margin when arrested on a business, which is not the case on traditional markets . “He [stress testing] Can be very rewarding when it is done correctly, “added Frontini.
Mike Kuehnel, CEO of the Flow Traders marketing company, underlined the need to make the innovation transparent to gain the confidence of investors and guarantee “the availability of data and the displacement of liquidity without fragmentation around it”.
“Get the best price and give you the opportunity to transform when you wish is a key ingredient,” added Kuehnel.
Liquidity, or market capacity to absorb significant orders at stable prices, has become a significant concern after the collapse of the FTX and its sister concern, Alameda. Although the depth of the order book has surely improved for major parts, fragmentation or liquidity distribution on several challenge platforms, blockchains and networks, remains a concern.
