Tag: Crypto Loans

Digital bank Anchorage offers Ethereum-backed loans to institutions

by Cointelegraph

Crypto custody bank Anchorage Digital is expanding its services into crypto-backed loans for institutional investors.

Clients at Anchorage can now access a line of USD credit backed by Ethereum through its partnership with U.S. commercial bank BankProv.

Anchorage Financing will introduce a simple way for investors to put their Ethereum holdings to work, enabling them to access USD to meet their needs without liquidating their holdings according to the announcement. The crypto custodian also offers staking services for additional yields on Ethereum

The digital asset bank holds on to the ETH, using it as collateral should a client be unable to repay the dollar loan. Clients with large ETH holdings will be able to access a larger line of credit. Anchorage already provides Bitcoin-backed loans through other capital providers.

Ethereum-backed loans may be under collateralized if the borrower passes appropriate risk due diligence checks according to Anchorage co-founder Diogo Mónica.

Dave Mansfield, CEO of BankProv, said that Anchorage’s collateral management tech is “world-class”, adding that it is a trusted partner to the banking industry:

“We firmly believe in our mission and belief that the crypto market should be afforded the same access and rights to traditional financing tools as any other legal, well-capitalized and compliant business in America.”

Anchorage was the first crypto firm to receive a charter from the U.S. national bank regulator in January 2021. BankProv is the tenth oldest bank in America, operating for over 200 years as The Provident Bank before a rebrand in 2020.

In late February, Anchorage raised $80 million in a Series C funding round led by GIC, Singapore’s sovereign wealth fund, with participation from Andreessen Horowitz, and Blockchain Capital. The funding helped the custodian to assist institutions by bringing crypto to their users and diversifying their corporate treasuries.

In late March, Anchorage teamed up with cryptocurrency trading platform Prometheum to launch a fully regulated alternative trading system, or ATS, tailed specifically for professional crypto investors.

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Crypto-collateralized loans may soon bring new investors to space

by Cointelegraph

Institutional investors will soon be able to receive Bitcoin-collateralized U.S. dollar loans through Silvergate Capital Corporation — the holding company of pro-crypto institution, Silvergate Bank.

According to an announcement from Silvergate, Coinbase Custody will be the custodian for loans funded through the bank’s Silvergate Exchange Network, or SEN. The network will provide access to capital through U.S. dollar loans collateralized by Bitcoin (BTC) while Coinbase holds the crypto in cold storage.

“Traditional lending services generally do not exist in the digital currency industry, which means there aren’t many lenders for investors to choose from,” said Jon Melton, Silvergate director of digital asset lending. “Our relationship with Coinbase Custody offers institutional investors increased access to capital efficiency so they can take advantage of market opportunities in the digital currency industry.”

Silvergate will offer loans starting at $5 million with an initial 12-month term. Such loans could augment or replace traditional funding rounds for firms looking to enter the crypto space.

Since first announcing it would explore offering crypto-collateralized loans in 2019, Silvergate’s annual revenue has more than tripled, from $30 million to $91.5 million. The bank said at the time that its clients had significant interest for Silvergate “to be involved in the custody and transfer of digital assets between customers.”

In the fourth quarter of 2020, CEO Alan Lane said the bank would be expecting “increased demand” for these loans in 2021. Though the number of digital currency deposits grew by $2.9 billion over the same period, the price of Silvergate Capital Corporation stock has been volatile in the first quarter of 2021, reaching an all-time high of $176.27 on Feb. 16 but falling 40% within three weeks. At the time of publication, NYSE:SI is valued at $148.90.