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Crypto, Clearing and Credit
Article

Crypto, Clearing and Credit

Bloomberg, 2022


Editorial Rating

9

Qualities

  • Analytical
  • Eye Opening
  • Hot Topic

Recommendation

Crypto is calling into question some basic relationships in finance and credit. A mathematical and statistically driven process, trading in the decentralized and disintermediated crypto space would suggest unbiased treatment for all participants, yet margin lending and the extension of credit (a word derived from the Latin for “trust”) rely to some degree on human judgment. In this enlightening analysis, financial columnist Matt Levine parses the proposed changes that impersonal crypto trading would bring to conventional securities finance.

Take-Aways

  • The fundamentals of cryptocurrency and traditional trading differ substantially.
  • The conventional model of securities finance involves individuals and firms.
  • A proposal to enable retail crypto derivative trading highlights an important risk.

About the Author

Matt Levine writes on matters of finance at Bloomberg Opinion.