Jumpstarting the Evolution of Crypto OTC Derivatives

While our Monday reports typically focus only on regulatory issues, we want to depart slightly this week and highlight for our clients the upcoming CORA meeting in Chicago, given BitOoda’s participation in this fast-moving collaborative effort that could have a significant impact on the development of the global digital asset environment. Following its recently publicized meeting in Singapore in January, the CORA Network is convening a group of OTC dealers (by invitation only) to advance a framework to make the global crypto derivatives market more orderly, organized, and financially sophisticated.

At the Chicago meeting on May 7th, BitOoda will join many of the industry’s other heavy-hitters to discuss the development of a crypto swap market, dealing with defaults, stablecoin collateral and settlement, and the need for a crypto trade repository. This follows CORA’s January meeting where the group conceptualized a crypto derivatives clearinghouse, which would serve as the central counterparty for crypto swaps and options. CORA-Singapore also produced a proposal for inter-dealer crypto OTC industry standards.

It would be an understatement to say that we are optimistic about the CORA initiative and BitOoda’s participation in it. The growing momentum and attention behind this collaboration, and the involvement of so many of the industry’s most important and influential leaders, indicate the potential for this effort to be a significant push toward the development of fair and orderly digital asset markets. This is similar to the goal of ADAM, the leading industry association group for fostering sound industry standards, where BitOoda is a founding member. The complex issues that CORA (and ADAM) are tackling in their respective efforts are exactly what we think industry should be doing to help fill the gaps in today’s regulatory environment, combat perceptions among regulators and the public about the instability and risk associated with crypto markets, and establish effective rules and standards.

We look forward to establishing a solid relationship with the new clearinghouse network, potentially called the Liquidity Offset Network, which will be regulated out of Singapore, the fintech capital of Asia. The Singapore Monetary Authority takes a relatively crypto-friendly approach to regulating digital asset activities, concerned mainly with ensuring that cryptocurrencies are not used for money laundering or terrorist financing. It is one of the most proactive countries in the world in terms of creating a clear regulatory framework for crypto exchanges, and already has dedicated guidance for crypto payment services.

Given the still-nascent nature of crypto as a new asset class and the complex regulatory environment we face in the U.S. and globally, we look forward to seeing the impact of CORA’s efforts to foster the infrastructure, processes, and perceptions that will help the OTC derivatives market mature and expand.

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