The cryptographic ecosystem has made a long way from the implosion of the FTX by Sam Bankman Fried destroyed billions in the wealth of investors in 2023. However, the industry as a whole needs more to become bulletproof, experts said experts in tradfi in the “views from Wall Street to Crypto event” held at the Hong Kong consensus on Wednesday.
“You have traditional players who have entered the space now, especially for us, most of our commercials occur from the exchange settlement, where you really keep your assets in the custodians while you can trade with exchanges,” Gautam Sharma, CEO and Cio de Brevan Howard said. “Then, technology has advanced in terms of the last 18 months since then, [but] There is more work to do. “
Sharma emphasized the need for risk management 24 hours a day, 7 days a week, including market risks, counterpart and credit.
The risk of counterpart refers to the possibility of a part involved in a transaction that does not meet its obligation, resulting in a loss for the other party. This type of risk is higher in crypto than in traditional finances, given the absence of intermediaries such as banks or cleaning houses that guarantee confidence and settlements, and is a cause of concern for directional and non -directional arbitration players.
“When we arbitrate, the risk of counterpart is the most important,” said Fabio Frontini, founder of Abraxas Capital Management, adding that the credit risk is also very important.
Frontini emphasized the importance of simulating stress test scenarios, referring to the market for perpetual futures where users can lose the margin when they stop in an operation, which is not the case in traditional markets. “He [stress testing] It can be very rewarding, when done correctly, “Frontini added.
Mike Kuehnel, CEO of the flow merchants of the market manufacturing firm, highlighted the need to make innovation transparent to gain the confidence of investors and guarantee “the availability of data and liquidity in motion without fragmentation to their around”.
“Obtaining the best price and giving it the possibility of transactions when you want is a key ingredient,” Kuehnel added.
Liquidity, or market capacity to absorb large orders at stable prices, arose as a significant concern after FTX collapse and his sister, Alameda. While the depth of the order book has surely improved for important currencies, fragmentation or liquidity distribution on multiple defi platforms, blockchains and networks, remains a concern.
