Alex Grebnev, a former Wall Street investment banker, is launching a platform called Oxygen. This platform will allow holders of cryptocurrency to hit repo (repurchase) Concords. Oxygen will join forces with the digital currency exchange services. It will focus on its 1.6 million institutional and private users.
In a repurchase contract, a bank trades some of its asset like united states Treasury bonds to financiers in return for funds using the asset as collateral. The bank then purchases the asset back to regain the primary asset and benefit from it. This platform -Oxygen is set to launch in 2018.
The launching of the repo agreements may have an effect on the crypto market in several ways:
Boosting liquid asset
Presently, several digital currency owners strive to dissolve their financial asset as transaction fee on the holdings have moved up. This has made it hard for asset holders to trade and unappealing for investors to acquire.
Oxygen wishes to fix this by permitting cryptocurrency holders to give out assets like Bitcoin, and then take on a different coin like Ethereum as collateral. By doing this, a holder loaning out his Bitcoin can buy and sell Ethereum for the period of the contract and also get back the Bitcoin when it closes. This will let people make income exchanging cryptocurrency without the need to sell.
Draw knowledgeable investors to cryptocurrency
Oxygen desire to permit crypto shorting as well, as stated in the scenario above, the individual who borrows the Bitcoin may trade it anticipating the price of the coin will eventually fall, with the hopes of repurchasing the assets at the right time in order to give it back and gain from the variance.
By enabling Shorting (an extensive tactic among Forex traders and hedge funds) in the crypto space may bring in more dominant stakeholders to the finance class. This may permit them to make transactions with the asset in the manner they are conversant with and proficient at.
Although the circumstance of the digital currency is encouraging in theory, the market is going to make these tools extremely risky. In normal repurchase agreements, the surety being discussed is basically a less high-risk asset, government most common bonds and collateral, whose price alternate reasonably small and in common ways.
Contrarily, practically all Cryptos are distinguishable by price alteration, making it extremely difficult even for adept investors to make some reasonable hypothesis regarding what the value, price or fees of this index will do. Hence, this channel could bring about massive losses, mainly for the inexperienced.