Institution investors from the traditional financial world are lacking in updated at -the -risk models to deal with crypto and may deal with the problem of the next bear market, according to Custodia Banks CEO Caitlin Long.
“Big Finance is here in a big way, and that seems Driving this cycle. I hope it will continue to drive this cycle, ”long said CNBC at the Wyoming Blockchain Symposium on Friday.
Long said Legacy’s financial institutions are comfortable taking significant amounts of action due to fail-safes developed in the system, such as window discounts and other “tolerance of sin.”
However, he warned that these benefits were lost in crypto, where real-time settlement occurs. The CEO said the mismatch between the crypto and legacy systems could create a Liquidity Crunch for these institutions:
“Types of tolerance of fault are built on the system for heritage factors, where systems do not update in real-time. In crypto, everything should be real-time, and it’s just a different animal.
I remember how the Titans of Finance reacted when the bear market inevitably arrived again. I know some optimistic and think it will never come. I have arrived since 2012, so I know it will come again, ”he added.
Institutional investors, including crypto treasury companies, are the most popular feature of the current market cycle.
Some investors view it as a positive development of driving adoption forward, while others warn that overleveraged and inexperienced companies will throw crypto next Crypto bear marketa contagion that spreads to the financial system.
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The CEO of Custodia boasts widely held concerns by industry and analyst executives
“The biggest systematic risk forward is the fact that you have an ecosystem that manages risk and re-balance real-time and another ecosystem that takes weekends, evenings, and holidays,” said Chris Perkins, President of investment firm Coinfund.
https://www.youtube.com/watch?v=zad4Fima-Oq
This mismatch between regulating mechanisms It can trigger liquidity issues, which is the root of all financial crises, Perkins told Cointelegraph.
In June, the firm of the Venture Capital (VC) race released a Report Ending that most of the new bitcoins (Btc) Treasury companies are do not survive in the next market collapse.
The VC company has warned that oververleveraging and lower price prices will create a vicious cycle that forces these treasury companies to drop their property in the market, especially depressed in the crypto market.
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