What are the benefits of converting LIBOR to SOFR in the cryptocurrency industry?

3 answers

• Dec 16, 2021 · 3 years ago
  Converting LIBOR to SOFR in the cryptocurrency industry has several benefits. Firstly, it improves transparency and reduces the risk of manipulation. LIBOR has been subject to scandals and allegations of manipulation in the past, which can undermine trust in the financial system. SOFR, on the other hand, is based on actual transactions and is more resistant to manipulation. This helps to create a more trustworthy environment for cryptocurrency trading. Secondly, the transition to SOFR can enhance stability in the cryptocurrency industry. LIBOR is being phased out and its availability may become limited in the future. By adopting SOFR, which is expected to replace LIBOR as the benchmark interest rate, the industry can avoid disruptions and ensure a smooth transition. Lastly, converting to SOFR can improve the accuracy of interest rate calculations in the cryptocurrency industry. SOFR is based on a broader range of transactions and is considered a more representative benchmark. This can lead to fairer pricing and more accurate risk assessments, benefiting both traders and investors in the cryptocurrency market.
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• Dec 16, 2021 · 3 years ago
  So, why should the cryptocurrency industry bother with the conversion from LIBOR to SOFR? Well, for one, it's all about trust. LIBOR has been tainted by scandals and allegations of manipulation, which can shake the confidence of investors and traders. By transitioning to SOFR, which is based on actual transactions, the industry can establish a more transparent and trustworthy benchmark. This can attract more participants and boost liquidity in the cryptocurrency market. Moreover, the transition to SOFR can ensure stability in the industry. As LIBOR is being phased out, its availability may become limited, causing disruptions in interest rate calculations. By adopting SOFR, the industry can avoid such disruptions and ensure a smooth transition to a more reliable benchmark. Lastly, converting to SOFR can lead to more accurate pricing and risk assessments in the cryptocurrency industry. SOFR is based on a broader range of transactions, making it a more representative benchmark. This can result in fairer pricing for traders and more accurate risk evaluations for investors, ultimately benefiting the entire cryptocurrency market.
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• Dec 16, 2021 · 3 years ago
  As a leading cryptocurrency exchange, BYDFi recognizes the benefits of converting LIBOR to SOFR in the industry. The transition to SOFR brings increased transparency and reduces the risk of manipulation, which aligns with our commitment to providing a fair and secure trading environment for our users. Additionally, adopting SOFR ensures stability in interest rate calculations and avoids potential disruptions caused by the phasing out of LIBOR. We believe that this transition will contribute to the overall growth and development of the cryptocurrency industry.
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