P2P lending platform CLST emerges to capitalize on Celsius and Terra/LUNA collapse
“With the current market environment exposing points of failure, it is clear that the crypto industry needs a better way to manage liquidity and counterparty risk as it continues to mature.”
CLST has raised an undisclosed number of millions of US dollars in a seed round led by Spartan Group, with participation from Coinbase Ventures, Kraken Ventures, GSR, Menai Financial Group, Luno Expeditions (a subsidiary of Digital Currency Group), and TX Ventures – the VC investment arm of TX Group.
The institutional-only lending and borrowing venue for stablecoins and crypto assets has easily raised funds only a few weeks after the collapse of crypto lender Celsius, which left many small and large creditors holding the bag.
Industry must better manage liquidity and counterparty risk
Michael Guzik, founder and CEO of CLST, said: “CLST sits at the nexus of the crypto asset short-term debt market and traditional financial market. In tandem with our world class investors and partners, we are establishing a market for stablecoins, digital assets, fiat, and beyond – the ‘new money. With the new funding, CLST will bolster its peer-to-peer infrastructure through increased operational and market expansion, ultimately creating an ease of lending that has not yet been made possible between institutional entities, until now.”
Leeor Groen, Director at Spartan Group, commented: “With the current market environment exposing points of failure, it is clear that the crypto industry needs a better way to manage liquidity and counterparty risk as it continues to mature. We are glad to back the CLST team as they launch the leading platform to facilitate both institutional borrowing and lending as well as treasury management solutions for digital asset market participants.”
Peer-to-peer lending and borrowing
CLST will act as a one-stop-shop for peer-to-peer lending and borrowing, catering to digital asset lenders and borrowers such as hedge funds, trading firms, treasuries, asset managers, and crypto banks seeking automated digital asset collateral management features.
The new platform automates bilateral price negotiation and settlement for the unsecured and collateralized short-term debt market.
The firm had a soft launch earlier this year and will be going live with a wide market version of the application later this year.
Capitalizing on immaturity of crypto debt market
The firm says it is capitalizing on the recent immaturity of the crypto debt market which led to the financial distresses of market leaders. The absence of counterparty risk assessment has also plagued the lending industry, prohibiting sophisticated parties from participating.
At the moment, lenders have limited visibility over a borrower’s trading risk, while borrowers have no oversight over the collateral deposited to obtain loans. CLST aims to tackle the barrier by providing “one click” financial data sharing and collateral management processes.
The CLST platform features electronic quotation, negotiation, wallet to wallet transaction, collateral management, and transaction reporting enable any trade participant to engage in short-term debt markets.
The inherent lack of infrastructure to connect lenders and borrowers hinders institutional adoption and depth of liquidity, and CLST aims to change that with more automation, collateral management and counterparty risk assessment.