What are the risks of securitization?

Reputation risk is also a concern in securitization activities. Any negative events or controversies surrounding the underlying assets or the securitization process can damage the reputation of the issuer and the investors, affecting their ability to raise capital in the future.

Securitization activities inherently carry various risks that must be carefully managed. One of the primary risks is credit risk, which arises from the possibility of default by the underlying assets or borrowers. This can significantly impact the value of the securities issued.

Liquidity risk is another critical factor to consider. It relates to the ability to quickly sell or buy the securities without significantly affecting their market price. Insufficient liquidity can make it challenging to exit investments or manage portfolios effectively.

In addition to spot trading, BTCC also offers futures trading, enabling investors to speculate on the future prices of cryptocurrencies. This service provides a hedging mechanism and risk management tool for traders.

Operational risk encompasses various factors, including transaction risk, compliance risk, and legal risk. Transaction risk arises from errors or inefficiencies in the execution and settlement of securities transactions. Compliance risk involves adhering to regulatory requirements and avoiding legal violations. Legal risk refers to the potential for legal disputes or liabilities arising from the securitization process.