Fidelity expands its BTC collateralised loan business
Finance firm Nexo has partnered with institutional custodian Fidelity to bring professional Bitcoin-related products to market, the company said in a statement Tuesday. The lender will leverage Fidelity's enterprise-grade infrastructure to expand institutional access to its prime brokerage platform.
" As a first step, the partnership with Fidelity Digital Assets will expand Nexo's ability to serve and enhance its growing portfolio of assets under management and provide an additional layer of custody to Nexo's military-grade security infrastructure ," according to the statement. .
Nexo said the partnership will allow it to explore the development of new products for institutional investors, including tripartite structures for Bitcoin-backed lending. Wall Street banks are also reportedly exploring ways to make institutional cash loans with bitcoin as collateral by emulating tripartite deals. The model, popular in traditional finance, leverages a third-party agent to ensure the proper delivery of cash and underlying assets to each party under the terms of the agreement.
This is not the first time that Fidelity Digital Assets has entered the Bitcoin-backed lending industry. In December last year, Bloomberg reported that the keeper had tiptoed into the space in partnership with BlockFi. In March, it extended its Bitcoin-backed loans by adding Silvergate as a partner.
Now, Nexo is the latest lender to leverage Fidelity's institutional custody and trading platform for the service.
" Working with Fidelity Digital Assets is the latest milestone in our quest to offer a comprehensive institutional platform and integrate traditional financial firms into the digital asset ecosystem, " said Kalin Metodiev, co-founder and managing partner of Nexo. .
" Our client base will now be able to make full use of our industry-leading credit and trading products by relying on Fidelity Digital Assets ' bespoke custody and security solutions ."
Nexo claims to serve over 2.5 million customers in 200 jurisdictions, offering Bitcoin-backed loans in over 40 fiat currencies. The problem is related to the stability of the guarantee: Bitcoin has shown a large volatility, going from over $ 68,000 to just over $ 40,000 in less than three months. We can understand that it is not easy to use BTC as collateral for a loan in Fiat currency. Wanting to make a parallel is like using a dollar guarantee for a euro loan: the guarantee may not always be adequate over time. So this additional risk, let's say exchange rate, must be hedged either with large margins or with financial hedging operations. It would be interesting to know which ones.
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The article Fidelity expands its business in BTC secured loans comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/fidelity-allarga-la-proprie-attivita-nei-prestiti-con-garanzia-in-btc/ on Thu, 09 Dec 2021 07:00:38 +0000.