Crypto’s Analog Crutch: Why Prefunding Does Not Scale for Institutions
By Steve Bartfield, CPO of BridgePort
Steven Bartfield, BridgePort
Prefunding is a retail-era substitute for prime brokerage and clearing, an analog escrow that solves the venue’s trust problem, not the investor’s. By forcing assets into exchange custody before execution, it eliminates venue settlement risk while stranding capital with the wrong party and shifting counterparty and operational risk onto institutions. Traditional markets solved this decades ago with credit lines, delivery versus payment (DvP), and netted post-trade settlement that keep assets at qualified custodians until needed. In that architecture, parking assets…
