P2P lending platform CLST emerges to capitalize on Celsius and Terra/LUNA collapse

Rick Steves

“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.

Read this next

Inside View

Private Equity Renaissance

Recent years have seen a resurgence in the concept of trading physical equities, with a slew of new arrivals joining the market for what is arguably one of the oldest forms of investing. But what has been the driving force behind this change in momentum?

Digital Assets

Dubai introduces new crypto regulations with fines of up to $135,000

Against the backdrop of a crashing market and burned investors, Dubai has sealed a landmark rulebook that governs how the Emirate will regulate cryptocurrency activities.

Institutional FX

FX volume drops 16pct at Russia’s largest exchange in January

The Moscow Exchange, Russia’s largest exchange group, released its monthly batch of trading volumes and metrics for January 2023 – the latest readings showed a pullback across the board for multiple segments, namely in the FX, given lower volatility and a reduced trading schedule.

Institutional FX

Standard Chartered sets up wholly-owned brokerage arm in China

UK-headquartered bank Standard Chartered said its Hong Kong arm has been granted an in-principle approval for a brokerage license from the China Securities Regulatory Commission (CSRC).

Digital Assets

Revolut offers staking for Ether, Cardano, Polkadot, and Tezo

British fintech and banking firm Revolut has introduced crypto staking — a practice of earning rewards for serving as a transaction validator in the Ethereum blockchain – to its UK and European Economic Area (EEA) customers.

Inside View

Saxo releases Q1 2023 Quarterly Outlook: “The Models Are Broken”

“2023 is likely to prove a rough ride for currencies if the USD bear market fails to continue in a straight line, but EUR and JPY may outperform.”

Institutional FX

FXPA welcomes Mesirow as a member of the institutional FX industry body

“Our deep commitment to advancing best practices align well with FXPA’s goals of championing a robust FX market for all industry participants.”

Industry News

ICE delivers Russian-free barrels of ICE Gasoil and expands ESG data in APAC

ICE changed the methodology for Low Sulphur Gasoil futures from previously delivering diesel from any origin, to deliver diesel that does not include any originating from Russia. ICE Gasoil is the global benchmark for refined oil products.

Digital Assets

Gate.io taps Coinfirm for AML/CFT compliance amid licenses in the US, Europe, Hong Kong

“At Gate.io, we continuously strive to mitigate AML/CFT and counterparty risks by integrating best-in-class security measures and safeguards into every part of our operations.”