Galaxy Digital Makes Its Next Move in Crypto Lending Markets
DrawBridge Lending (DBL), a digital asset loaning, borrowing and investing company, is partnering with merchant bank Galaxy Digital to greatly expand DBL’s institutional investment and lending capacity.
According to a statement, the two companies “will initially develop a co-branded special purpose loan funding vehicle (‘SPV’) with a mandate to provide structured financing against institutionally held crypto assets,” offering “institutions a secure and regulated method for leveraging their digital assets while retaining ownership.”
This partnership, which comes with a direct cash investment from Galaxy Digital into DBL, will allow the loan and investment capabilities already on DBL’s platform to gain a wider audience.
“The institutionalization of digital assets is still relatively nascent despite increasing momentum and interest from a number of respected firms and industry players,” Galaxy Digital’s founder and CEO Mike Novogratz said, adding that “as we look to the future, we recognize the benefit of aligning ourselves with smart and innovative strategic partners who know how to effectively execute in the institutional space.”
Crypto Lending Strategy
Although DBL’s crypto loans are very similar in some respects to those offered by BlockFi, a company that Galaxy Digital has cooperated with in the past, Jason Urban, DBL’s CEO, clarified in an interview with Bitcoin Magazine that the two models are different in several key aspects.
Whereas any customer may take advantage of BlockFi’s loans, Urban said that DBL “uses options markets to price all of our loans and investment products, and the options are deemed as swaps by the [Commodity Futures Trading Commission]. Because you cannot sell swaps to retail investors, all of our clients must meet certain accreditation threshold requirements.” He added that the company is preparing itself for a time when a greater percentage of the overall crypto loan space is in the hands of accredited institutions.
“We will offer loans in virtually any coin, so long as we can find a liquid or semi-liquid two-sided options counterparty to transact with,” said Urban, adding that, besides bitcoin, “this includes many of the top 20 coins in the world” as well as “coins that we’re seeing increased interest in.”
Urban also claimed that DBL has additional plans to roll out new features in the next several months, primarily “a coin lending platform where hedge funds and principal trading firms can borrow and lend coins in an anonymous fashion based on a credit profile which both parties can see. The feedback we’ve gotten from the trading community in regards to this product is outstanding, and we are excited to launch that offering by late 2019.”