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As Warren Buffett once opined “only when the tide goes out do you learn who’s been swimming naked.” It certainly feels like the waters have been receding on the crypto community over the past year.
In line with this quote from Chi Chi Rodríguez, the professional golfer, it’s the received wisdom that crypto-trading volumes are grossly inflated. But to what extent?
There can be no doubt that this has been a pivotal year for digital assets. Valuations have dropped dramatically. Investors have lost money. But the ecosystem has survived relatively intact and outflows have started to reverse. However 2022 has also been a transitional year for another important reason.
It’s generally agreed that location is an important consideration in counterparty risk. If you are registered and regulated in North America, you are seen as safer than someone based in Palau. But how do you convert this intuition into a number that can be used for managing risk exposure? It’s not as easy as it may sound.
