Ex-Goldman Banker Plans Launch of Crypto Repo Platform
A former Goldman Sachs employee wants to launch a platform allowing investors to operate with repurchase agreements based on cryptocurrencies.
Alex Grebnev, formerly a banker at Goldman Sachs, wants to create a cryptocurrency platform that would help traders short one cryptocoin against another, the Wall Street Journal reports. Under this plan, the platform is set to launch in 2018 and target private and institutional investors seeking to cut repurchase agreements (repos) among themselves.
In a repo, one entity sells an asset (cryptocurrency in this case) to another at a certain price at the start of the transaction and pledges to repurchase the asset from the initial buyer at a future date at a different price. If the seller fails to buy back the asset, the buyer can put it on the open market, which makes the asset a kind of collateral during the repo.
While at Goldman, Grebnev dealt with stocks and derivatives for almost ten years. He is now working with crypto exchange Changelly and plans to launch the repo platform on Changelly’s infrastructure and client base. The platform will operate under the name Oxygen and will allow traders to generate profits by lending out their cryptocoins.
The repo is a common type of transaction in today’s financial world, most often involving bonds. Borrowers can raise money by selling their bonds and repurchase them at a later date, paying a fee for this arrangement.
Similarly, cryptocurrency holders would generate profits from lending their cryptocoins through Oxygen to a second party. In return, they would receive another cryptocoin as collateral until their initial token is returned. The second party would use the borrowed coin for short-term trading or transactions and will have to pay a fee as part of the deal.
Grebnev expects the repo duration to range from a few hours to a year or two. “We are at the very beginning of the journey, but the journey is happening very fast,” he said, referencing the evolution of cryptocurrencies as an asset class.
If the plan succeeds, the crypto market can move even closer to the mainstream. In December, Chicago-based CME and CBOE launched Bitcoin futures contracts, which brought the cryptocurrency to professional and institutional investors.