Crypto loan Genesis accepts NFTS as security for loans

The digital-asset trade group Genesis has started not to accept fungal tokens as security for loans and derivative business, a sign that digital art has found its way into the booming market for complex crypto finance products.

Genesis opens up one of the hottest corners of the digital financial sector by developing financial products supported by NFTS, a kind of digital collector's items that can be traded on Blockchains.

"NFTS occur in almost every conversation," said Joshua Lim, head of the derivative trade near Genesis, in an interview with the Financial Times.

The market for NFTs has grown to $ 40 billion last year, and the enthusiasm that surrounds it also continues in 2022. The value of digital collector's pieces on the subject of sport will be estimated at $ 2 billion this year, after the broader area of ​​digital collector's art has reached public awareness for the first time in 2021.

The structuring of products around NFTS enables investors to pledge their tokens in a similar way to a traditional dealer would use a high -quality asset such as government bonds to underpin a financial transaction. However, NFT prices can be very volatile, which adds another risk to the products introduced by Genesis.

LIM said that the company, which is part of the Digital Currency Group from Barry Silbert, is pursuing a "very conservative approach" when evaluating NFTs as a backing for loans or trades and its use as security against loans or trades. He said Genesis only take "Blue-Chip" nfts, which have a certain historical importance or a lively market for secondary trade.

Genesis is the greatest trading desk for professional investors in cryptocurrency markets. In the last three months of 2021, the company drawn loans of $ 50 billion, which increased the total of the year to $ 131 billion. Trading DESK handled transactions in cash and derivatives worth $ 170 billion last year.

The derivative markets for digital assets grew eight times between June 2019 and June 2021, as structured products worth a total of 3.2 trillion US dollars in trading places, according to the data from CryptoCcompare.

The derivative markets made up a little more than half of the overall traded cryptocurrencies, which means that the volumes overlook the cryptocompare.

The growth of the derivative markets was partially heated by the entry of professional participants, including banks, since regulatory restrictions cause such institutions to not be able to act on the cryptoma markets for cash. This has strengthened the volume of the Futures Contracts listed on the Chicago Mercantile Exchange Exchange and recently the trade with "Over-the-counter" crypticodats that are traded outside of stock exchanges.

As a sign of the growing range of financial products that build on digital assets, the international swaps and derivative association, the standardization committee for derivatives, announced that it would develop a framework for digital assets.

According to a report by the Digital Asset Exchange Kraks, one of the fastest growing segments in the area of ​​digital assets are

nfts. Large brands in the areas of sports, wine, art and fashion have launched special NFTs in the past few months, in the hope of being able to benefit from boom despite the examination due to fraud cases and price manipulations as well as hacks and counterfeits.