Challenge

• Crypto market exchanges, acting as custodians, and operating in the dark, meant users didn’t have 100% certainty where their funds were.
• Digital assets exist on multiple blockchains making delivery vs delivery a challenge.
• Transaction fees can be high, settlement finality can take time, and moves are public.

Solution

• Clear Markets, operators of a regulated electronic marketplace, is now offering large institutional investors a way to trade crypto derivatives through a regulated platform meant to mirror traditional markets.
• The system automatically identifies whether two parties have sufficient collateral to settle a trade before it happens. Once confirmed, the collateral is locked at the custodian, and recorded using R3’s distributed-ledger technology Corda. Digital assets are Tokenized and moved on Corda.

Why Corda?

• Corda played a major role by sharing trade data and collateral information, and moving collateral in real time, with security and appropriate transparency among counterparties, custodians, and other relevant parties.

Results

• Over-the-counter (OTC) crypto options trade executed on Clear Markets regulated platform without involving a clearing house, the first such transaction in the digital asset industry.
• The risk management techniques involved were consistent with ISDA’s requirements for uncleared derivatives.
• All the rules are set up, clearly, providing automation and controlled transparency.
• DvD transactions settle privately in real-time with reduced fees.