KeyTango Partners with GSR to Reduce Crypto Counterparty Risk
- The crypto clearinghouse is partnering with OTC trading desks to remove the responsibility of crypto custody.
Israel-based cryptocurrency settlement solution provider, KeyTango, has partnered with GSR Markets, to enable over-the-counter (OTC) crypto desks to reduce counterparty risk and avoid the responsibility of cryptocurrency custody.
According to a report from THE BLOCK, KeyTango, and OTC firm GSR Markets recently piloted options trading. As of now, when trading crypto, investors have to deposit funds with OTC Desks OTC Desks Over-the-counter (OTC) desks facilitate the trading of securities that are unlisted on a formal exchange due to various reasons. This can encompass many different asset classes, most notably cryptocurrencies.Often times, due to economies of scale, smaller companies are unable to comply with the listing requirements of formal exchanges or reconcile large fees required by the big industry players. In this scenario, OTC trading desks play a major role, enabling Peer-to-Peer (P2P) crypto trades thro Over-the-counter (OTC) desks facilitate the trading of securities that are unlisted on a formal exchange due to various reasons. This can encompass many different asset classes, most notably cryptocurrencies.Often times, due to economies of scale, smaller companies are unable to comply with the listing requirements of formal exchanges or reconcile large fees required by the big industry players. In this scenario, OTC trading desks play a major role, enabling Peer-to-Peer (P2P) crypto trades thro Read this Term and exchanges before they can execute a trade. However, in the pilot, the OTC desk didn’t receive the seller’s collateral in advance.
As an alternative, instead of depositing the funds with the OTC desk, the seller deposited their collateral in a digital wallet, which had three key shares. These keys were held by GSR, the seller, and an agreed-upon arbitrator.
With the current crypto trading model, when traders need to deposit funds with the OTC desks or exchanges, their funds become vulnerable to hacks, which plague the digital asset industry.
KeyTango looks to traditional asset trading
The approach between KeyTango and GSR Markets models that of traditional asset trading. This is because the security of funds when trading is usually handled by clearinghouses, which act as an intermediary between a buyer and seller, with their aim to ensure that the process from trade inception to settlement is smooth.
Similar to a Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term, KeyTango uses digital wallets where clients can deposit their funds, as an alternative to giving them to OTC desks and exchanges. According to the cryptocurrency news outlet, the trading desk and the client can use their key shares to co-sign a transaction.
These digital wallets are secured by multiparty computation (MPC). This allows two trading parties to co-sign transactions, which then release the funds from the wallets.
KeyTango CEO Dan Danay
Source: LinkedIn
Speaking on the process to THE BLOCK, KeyTango CEO Dan Danay said: “Basically we use MPC to completely decouple running the logic layer in doing any kind of centralized crypto trading, and doing the actual settlement…”
“The comparison between MPC and Multi-signature is exactly like in custody. If you want to do this with multisig, you will be limited to the chains that actually support multisig contracts you can actually trust.”
Although KeyTango has recently piloted options trading with GSR, the company is looking to expand its partnerships. According to the company’s CEO, the firm has on-boarded multiple OTC desks and lending firms. The partnerships will be announced soon.
“We are excited to be involved in the advancement of this new technology. It not only reduces the counterparty risk prevalent in trading digital assets but also helps decentralize the trading process, which is key for the industry’s development,” added GSR co-founder Cris Gil.
Israel-based cryptocurrency settlement solution provider, KeyTango, has partnered with GSR Markets, to enable over-the-counter (OTC) crypto desks to reduce counterparty risk and avoid the responsibility of cryptocurrency custody.
According to a report from THE BLOCK, KeyTango, and OTC firm GSR Markets recently piloted options trading. As of now, when trading crypto, investors have to deposit funds with OTC Desks OTC Desks Over-the-counter (OTC) desks facilitate the trading of securities that are unlisted on a formal exchange due to various reasons. This can encompass many different asset classes, most notably cryptocurrencies.Often times, due to economies of scale, smaller companies are unable to comply with the listing requirements of formal exchanges or reconcile large fees required by the big industry players. In this scenario, OTC trading desks play a major role, enabling Peer-to-Peer (P2P) crypto trades thro Over-the-counter (OTC) desks facilitate the trading of securities that are unlisted on a formal exchange due to various reasons. This can encompass many different asset classes, most notably cryptocurrencies.Often times, due to economies of scale, smaller companies are unable to comply with the listing requirements of formal exchanges or reconcile large fees required by the big industry players. In this scenario, OTC trading desks play a major role, enabling Peer-to-Peer (P2P) crypto trades thro Read this Term and exchanges before they can execute a trade. However, in the pilot, the OTC desk didn’t receive the seller’s collateral in advance.
As an alternative, instead of depositing the funds with the OTC desk, the seller deposited their collateral in a digital wallet, which had three key shares. These keys were held by GSR, the seller, and an agreed-upon arbitrator.
With the current crypto trading model, when traders need to deposit funds with the OTC desks or exchanges, their funds become vulnerable to hacks, which plague the digital asset industry.
KeyTango looks to traditional asset trading
The approach between KeyTango and GSR Markets models that of traditional asset trading. This is because the security of funds when trading is usually handled by clearinghouses, which act as an intermediary between a buyer and seller, with their aim to ensure that the process from trade inception to settlement is smooth.
Similar to a Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term, KeyTango uses digital wallets where clients can deposit their funds, as an alternative to giving them to OTC desks and exchanges. According to the cryptocurrency news outlet, the trading desk and the client can use their key shares to co-sign a transaction.
These digital wallets are secured by multiparty computation (MPC). This allows two trading parties to co-sign transactions, which then release the funds from the wallets.
KeyTango CEO Dan Danay
Source: LinkedIn
Speaking on the process to THE BLOCK, KeyTango CEO Dan Danay said: “Basically we use MPC to completely decouple running the logic layer in doing any kind of centralized crypto trading, and doing the actual settlement…”
“The comparison between MPC and Multi-signature is exactly like in custody. If you want to do this with multisig, you will be limited to the chains that actually support multisig contracts you can actually trust.”
Although KeyTango has recently piloted options trading with GSR, the company is looking to expand its partnerships. According to the company’s CEO, the firm has on-boarded multiple OTC desks and lending firms. The partnerships will be announced soon.
“We are excited to be involved in the advancement of this new technology. It not only reduces the counterparty risk prevalent in trading digital assets but also helps decentralize the trading process, which is key for the industry’s development,” added GSR co-founder Cris Gil.