Ram Ahluwalia, the CEO of PeerNova, recently commented on the liquidity challenges the crypto market faces. According to Ahluwalia, the lack of a crypto bank settlement layer has led to a significant drying up of liquidity, hurting market makers and other participants in the industry.

In traditional finance, the solution to this problem is provided by well-capitalized clearinghouse firms such as the Depository Trust and Clearing Corporation (DTCC), Chicago Mercantile Exchange (CME), and Intercontinental Exchange (ICE). 

These firms act as the intermediary between buyers and sellers, assuming the role of the seller to every buyer and the buyer to every seller. This allows market makers to settle instantly with counterparties without taking on any counterparty or settlement risk.

The role of clearinghouse firms in traditional finance is crucial for ensuring market stability and facilitating efficient trading. By assuming the counterparty risk of every trade, these firms provide confidence and security that encourages market participants to trade with one another. 

1/ Crypto market liquidity has dried up significantly.

These are the consequences of a lack of a crypto bank settlement layer (SI & Signature).

Market makers need a way to settle instantly with counterparties (eg, exchanges, HFs, other MMs).