Posted 1 year ago | by Ben Armstrong
BitGo Launches its First Institutional Crypto Lending Service
The cryptocurrency lending industry is growing, and one of the major crypto companies has entered the business. BitGo will be a crypto lender.
Earlier this week BitGo announced that it will be launching an institutional-level crypto lending service. The BitGo’s lending feature is a result of the several-month-long private beta test. The platform claims to handle over 20% of all Bitcoin (BTC) transactions.
BitGo is Taking Lessons From The Established Markets
Nick Carmi, the head of financial services at BitGo, stated that the new crypto lending platform was developed to create a lending business that is similar to lending services that one would find in the traditional financial markets.
Carmi also added that the BitGo’s lending service is part of the company’s sustainable business model:
“We are not interested in a high-volume, low-margin business; we are building deep relationships with our clients to drive value for them and to create a long term, sustainable business.”
According to the company’s statement, BitGo’s lending feature mainly offers fully collateralized loans with detailed reporting for each client, as well as the ability to work with regulated custodian BitGo Trust.
The company has also opened custodial services in Switzerland and Germany, which it feels are crypto friendly jurisdictions. The USA is still lagging when it comes to crypto regulations, and it is starting to show in deals like this one.
New Options for Crypto Lending
Nick Carmi, who is BitGo’s head of finance and has experience on Wall Street, said that BitGo is focused on the institutional market and has no plans to make the product available to non-institutional traders. BitGo’s crypto lending service was built by a team of Wall Street investment specialists focusing on institutional clients.
“We started our lending with BTC, and very rapidly expanded into other cryptocurrencies such as ETH, LTC, BSH, DASH, stable-coin, and fiat. Bitgo’s lending services can support over 15 different coins. All of our loans are collateralized, some at above 100% and others at below depending on the coins, the term, and the counterparty credit.”
Mike Belshe, the CEO of BitGo, said that the company’s lending service comes from “melding the best” of Wall Street expertise, including institutional investors and Silicon Valley’s culture of technology and innovation.
This step by BitGo marks another move toward a more mature crypto market that is catered to investment professionals. As more institutional traders enter the crypto markets, these tools will allow them to use the same kinds of strategies that are already deployed in the existing financial markets.