Digital asset custodian Hex Trust and Clearpool Finance, a decentralized capital market ecosystem focused on institutional lending and credit markets, has announced a partnership in which Hex Trust will incubate Clearpool, provide custody services to their participants as well as compliance services, such as know your customer, identity verification and transaction monitoring.
Digital asset institutions like crypto hedge funds, market makers and trading desks do not have the same access to capital as their traditional counterparts. Traditional lending institutions do not typically lend to crypto institutions, leading them to seek alternative methods of funding in the decentralized and centralized finance markets.
These alternatives, though novel in design, also present novel problems, mainly in the form of over-collateralization and risk of liquidation from a borrower's perspective, while default risks remain from a lender's perspective.
Clearpool’s ecosystem enables institutions to access unsecured loans, eliminates liquidation risk, and creates attractive return opportunities for liquidity providers. The protocol also introduces a credit reputation framework and creates a sophisticated tokenized credit and risk management solution allowing limited partnerships to monitor, manage and hedge risks.
“At Hex Trust we believe that DeFi [decentralized finance] platforms will eventually mature and play an important role in the institutional market,” says Alessio Quaglini, Hex Trust’s CEO and co-founder. “By combining Hex Trust’s fully compliant and regulated approach with an innovative protocol such as Clearpool, we’re putting together a building block for a future decentralized capital market ecosystem.”
Clearpool has recently secured funding from a range of leading global investors, and Hex Trust has over 100 institutional clients, including a range of banks, financial institutions, exchanges, investment funds, corporations and digital asset projects.