Genesis, a digital asset trading group, has begun accepting non-alternative tokens as collateral for loans and derivative transactions as a sign that digital art has entered the fast-growing market for complex crypto financial products.
Genesis leverages one of the hottest areas in the digital financial industry by building financial products backed by NFTs, a type of digital collectible that can be traded on the blockchain.
“NFTs appear in almost every conversation,” Joshua Lim, head of derivatives trading at Genesis, said in an interview with the Financial Times.
NFT market Swelled to $ 40 billion Last year, and the enthusiasm surrounding them, continued until 2022.Sports-themed digital collections Reach 2 billion dollars This year’s value is after the wider area of digital art that can be collected first hit public awareness in 2021.
By structuring the product around NFTs, investors can pledge tokens in the same way that traditional traders use high-rated assets such as government bonds to support financial transactions. However, the price of NFTs can be very variable, adding additional risk to the products introduced by Genesis.
According to Lim, a member of Barry Silbert’s digital currency group, the company evaluates NFTs as a backstop for loans and transactions and takes a “very conservative approach” to use them as security for loans and transactions. I’m taking it. He said Genesis employs only “good” NFTs with historically significant or active markets for secondary trading.
Genesis Largest trading desk For professional investors in the cryptocurrency market. In the last three months of 2021, the company has underwritten $ 50 billion in loans, boosting its annual total to $ 131 billion. Last year, the trading desk processed $ 170 billion worth of cash and derivatives transactions.
According to CryptoCompare data, the derivatives market for digital assets grew eight-fold between June 2019 and June 2021, with a total of $ 3.2 trillion in structured commodities changing trading locations.
According to CryptoCompare, the derivatives market accounts for more than half of the total cryptocurrencies traded, which means that the volume is higher than that of the cash market.
Derivatives market growth is partly Entry for professional participants Regulatory restrictions include banks as they mean that such institutions cannot trade in the cash crypto market. This has increased the volume of futures contracts listed on the Chicago Mercantile Exchange and has recently strengthened trading of “over-the-counter” crypto derivatives that trade outside the exchange.
Earlier this month, the International Swaps and Derivatives Association, a derivative standards-setting body, announced that it would develop a digital asset framework as a sign of expanding reach for digital asset-based financial products.
Digital Asset Exchange Kraken reports that NFTs are one of the fastest growing segments in the digital asset space. Major sports, fine wine, art and fashion brands have set up dedicated NFTs in recent months in the hope of taking advantage of the boom, despite scrutiny due to fraud, price fixing, hacking and counterfeiting. raised.
Cryptographic lender Genesis accepts NFTs as collateral for loans
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