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Former Goldman Sachs Banker Brings Cryptocurrency To The Financial Mainstream

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A former Goldman Sachs banker plans to launch a digital currency platform this year that will make it easier for crypto investors to earn yield, borrow assets to go short and raise liquidity against crypto -- helping the crypto market move to the financial mainstream.

Alex Grebnev, who worked at Goldman Sachs for almost a decade in a variety of roles in equities and derivatives structuring before he joined Merrill Lynch, has partnered with the founders of Changelly one of the leading instant cryptocurrency exchanges. According to the Wall Street Journal, Mr Grebnev plans to launch a platform for digital currencies later in 2018.

He saw the opportunity early and approached the cryptocurrency market with a deep knowledge of the ins and outs of mainstream financial markets. He takes his experience of 15 years at Goldman Sachs and Merrill Lynch to form a company, called Oxygen, that unlocks value in crypto assets through Repurchase Agreements. Oxygen allows asset-holders to put their crypto to work - earn yield and raise liquidity against crypto assets, and enables traders to hedge risk and easily open short positions.

Any institution or person who owns digital currencies can earn money from lending out their digital currency (ethers or ERC 20-based tokens to start with) -- on the Oxygen platform. “In exchange they take as collateral another crypto asset until their original asset is returned. Borrowers get access to a cryptocurrency they want to use or trade for short or long-term,” Mr. Grebnev notes. “We are at the very beginning of the journey, but the journey is happening very fast,” said Mr. Grebnev in reference to cryptocurrencies as an asset class.

How Does It Work?

The Oxygen platform will let investors generate income by lending out their cryptocurrencies -- assets which at present don’t offer the asset holder any way to earn income off. The platform will charge a fee for each transaction and will target B2C and B2B cryptoholder markets, starting with Changelly's existing 1.6 million clients.

“Oxygen combines centralized web applications for user convenience and ethereum smart contract to ensure asset security. Smart contract executes terms of a contract automatically and allows the performance of transactions without third parties. This solution makes the platform balanced, reliable and protects all parties”, says Alex Melikhov, the Chief Operating Officer and Co-Founder of Oxygen.

Beyond Bitcoin Futures, Here Come Repos

Bitcoin futures just started trading December 2017 and many investors have been disappointed. Additionally, the digital currency market is not liquid like government bonds are.

Alex Grebnev saw an opportunity to take cryptocurrencies beyond futures, where investors sell their cryptocurrency at a later date to turn a profit, and into cryptocurrency repos.

“The cryptocurrency markets are developing very fast. Some parts of the market infrastructure are still missing in the crypto-world, compared with the “real” financial markets. We are building a market that is critical for any developed market - to allow to raise liquidity against assets without selling them and get hold of assets without buying them. This is key for any efficient market” Mr. Grebnev told me.

Repo transactions are the oil that lubricates modern financial markets with more than $12 trillion outstanding in the US and Europe ($8.8 trillion globally in government bonds alone).

Ethereum based Smart Contracts are at the heart of the Oxygen platform -- which are inspired by he standardized Global Master Repurchase Agreement (GMRA) documentation -- a tried and tested legal framework that supports the $12 trillion dollar global repo market. These have stood the test of time, including the Global Financial Crisis (GFC) between 2007 and 2009 and the Lehman bankruptcy. The resilience of repo markets throughout the GFC enabled long-term asset holders to monetize their holdings and avoid undervalued fire sales.

Oxygen at launch will accept ether and ERC-20 tokens, a popular token standard of Ethereum, which includes the widest range of cryptocurrencies. After the cross-chain solution hits the market, Oxygen plans to integrate Bitcoin and other cryptocurrencies to the platform.

Who Is The Competition?

Alex Grebnev is not the first entrepreneur who wants in on the cryptocurrency loan market, but he certainly is the first to be creating a crypto-repo market.

SALT is the lending platform that lets cryptocurrency shareholders profit in the real world. SALT is a company that allows users to put up assets as collateral against getting a cryptocurrency loan in Bitcoin or Ethereum, or any cryptocurrency carried by the ERC20. Like Oxygen, SALT also accepts ERC20 tokens, but unlike Oxygen, SALT gives out loans in US Dollar. Once the loan is paid back, the borrowers get their cryptocurrency back without penalties or repossession. If you were shopping for an alternative to a mortgage, SALT could potentially qualify, but it would be a high risk endeavor. However, the SALT platform does not allow users to lend. SALT is just a borrowing platform where the user can receive cash, which is not comfortable to the user who wants to use assets for trading. Further SALT is limited in the number of currencies the user can borrow.

What’s Next?

Oxygen is launching soon this year. It’s a new company in the digital currency market that has seen massive gains while, at the same time, has left mainstream investors dubious.

The hype and attention to Bitcoin has brought scepticism to the very early stage cryptocurrency market where investors have made profits by trading their digital currencies. Besides Bitcoin’s jump of more than 1200%, Ripple XRP is another currency that has surged by 35,000% in the same period. Many early investors have made so much money that they want to put up their cryptocurrencies to go to work for them. They want to go beyond what they will make in future earnings.

As Robert T. Kiyosaki sagely said, “take responsibility for your finances or get used to taking orders for the rest of your life. You’re either a master of money or a slave to it. Your choice.”

 

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