Money Markets meet Crypto – Part II - CLST
  • Company
    • About Us
      Who and Why
    • Media & Press
      Media & Press
    • Contact Us
      Reach Out
  • Insights
    • Blog
      Inform
  • Request Demo
  • Sign In

Getting access usually takes 5 minutes to complete.
Please note you will need a few business documents on hand to complete the KYB process.
Start Now Request a Demo instead

Money Markets meet Crypto – Part II

May 23, 2022

Crypto needs a money market 

By now, the crucial importance of money markets should be obvious. And just as today’s traditional world of finance is dependent on money markets, the newly emerging asset class around crypto assets will need one too. After all, within the crypto industry, as institutions of all sorts are maturing, they are developing the same set of sophisticated market financing needs that traditional companies have had for decades.   

Consequently, the crypto lending market has grown significantly. According to a research report from Arcane, from Q3 2019 to Q4 2020, the total active collateral in the crypto lending market grew by 1170 percent3. And the most recent numbers from Q4 2021 show that one of the biggest crypto lending providers Genesis saw its loan originations reach $50 billion, an increase of 565% year-on-year comparison4.  

Genesis is only one of many companies that have emerged in the crypto lending space. Others are BlockFi, Unchained Capital, Ledn, Nexo, Celsius, Coinloan, or Salt Lending. There are also entities like Binance or other exchanges that act as lenders and borrowers of crypto assets. And even traditional players like Fidelity or Silvergate have ventured into crypto lending.  

Lending services play a crucial role in today’s crypto asset trading ecosystem. They are providing essential access to liquidity for various actors. Among them are firms with crypto-denominated liquidity requirements, actors that are looking for leverage, proprietary trading firms, or arbitrage funds. One of the biggest demanders of crypto lending services is market makers that make use of these crypto lending facilities as they borrow different cryptocurrencies and stablecoins for liquidity provision elsewhere. And even exchanges that do crypto lending themselves can act as borrowers if – for example – they don’t want to deplete cold storage funds to honor withdrawal requests. The same goes for miners that have Bitcoin-denominated cash flows and don’t want to sell their Bitcoin but borrow them to cover their operational costs. Last but not least, there are ever more companies that hold Bitcoin and other cryptocurrencies on their balance sheet. But instead of just keeping them idle, these companies want their Bitcoin to work for them. Hence, they lend them out for interest. This is a natural development as crypto gets bigger and bigger.

Crypto lending is highly tailored to the mechanics of money markets. Because Bitcoin is a fundamentally deflationary asset, not many businesses are interested in acquiring longer-term liabilities denominated in Bitcoin. Therefore, crypto lending has more in common with short-term securities lending and is thus a good match for money market operations. But there is just one problem today: No money market exists for crypto assets yet.  

Welcome to CLST

At CLST, we are establishing a network of lenders and borrowers to become the institutional gateway for uncollateralized lending.

Related articles

Blog

Weekly Insights: January 9th-13th 2023

January 16, 2023
Blog

Key lessons from the retail crypto crisis of…

October 25, 2022
Blog

The Ultimate Guide to Stablecoins

September 26, 2022

NEW MONEY MARKETS

We create markets for the new money.

At CLST, we are establishing a network of lenders and borrowers to become the institutional gateway for collateralized and uncollateralized lending.

Company

  • About Us
  • Media & Press
  • Contact Us
Request Demo

Insights

  • FAQ
  • Glossary
  • Blog

Legal

  • Terms & Conditions
  • Privacy Policy
  • Cookie Policy
©2022 CLST. All Rights Reserved.
Get Access
  • Company
    • About Us
      Who and Why
    • Media & Press
      Media & Press
    • Contact Us
      Reach Out
  • Insights
    • Blog
      Inform
  • Request Demo
  • Sign In
Privacy and Cookies Policy
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.

Read More
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT
CLST logo.
  • Company
    • About Us
      Who and Why
    • Media & Press
      Media & Press
    • Contact Us
      Reach Out
  • Insights
    • Blog
      Inform
  • Request Demo
  • Sign In