Key Insights:

• Gaurav Sharma from Brevan Howard underscored the significance of continuous risk management, acknowledging advances made since the FTX collapse.
• Fabio Frontini of Abraxas Capital highlighted that counterparty risk is paramount during arbitrage operations.
• Mike Kuehnel from Flow Traders emphasized the importance of seamless transactions for traders.

The crypto ecosystem has evolved significantly since the collapse of Sam Bankman-Fried’s FTX, which devastated investor wealth in 2023. Despite technological advancements and the influx of traditional finance players into the sector, experts reaffirmed at the “Views From Wall Street to Crypto” event that further measures are necessary to enhance resilience.

Importance of 24/7 Risk Management

Sharma advocated for the round-the-clock management of various risks, namely market, counterparty, and credit risks. He explained how traditional players rely on exchange settlement, where assets are held by custodians while trading on exchanges.

Frontini elaborated on counterparty risk’s elevated nature in crypto transactions due to the lack of trusted intermediaries, making risk management even more critical than in traditional finance.

Kuehnel shared insights on maintaining investor confidence through transparent innovation and ensuring that liquidity is readily available to facilitate transactions at preferred prices.

Concerns regarding liquidity remain prevalent in the context of the broader crypto landscape, particularly following the FTX fallout, despite improvements noted in order book depth for major cryptocurrencies.