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How Is the Value of Collateral Determined for Volatile Assets like Cryptocurrency?

The value is determined by applying a "haircut" to the market value of the cryptocurrency. A haircut is a percentage reduction that accounts for the asset's volatility and the risk of its value dropping sharply before it can be liquidated.

Highly volatile assets receive a larger haircut, meaning more crypto is needed as collateral. This is a conservative risk management practice.

Why Might a CCP Apply a 100% Haircut to a Specific Type of Cryptocurrency Collateral?
What Is a “Haircut” in the Context of Collateral Valuation?
Define “Collateral Haircut” in the Context of Derivatives Margin
What Factors Determine the Size of a Collateral Haircut?