Fabian Dori says the chief investment office at digital assets bank Sygnum prefers to use onchain as collateral rather than ETFs. Onchain collateral is also beneficial for borrowers.
Dori noted that because onchain assets have a higher liquidity, lenders can execute margin requests for them. crypto-backed loans On demand, lenders can offer a higher ratio of loan-to value (LTV) to the borrowers since they are able liquidate collateral instantly. Dori said to Cointelegraph that:
“It’s actually preferable to have the direct tokens as collateral, because then you can do it 24/7. If you need to execute a margin call on an ETF on Friday at midnight, when the market is closed, then it’s more difficult. So, direct token holding is actually preferable from that point of view.”
The loan-to-value in cryptocurrency refers to the difference between the total loan amount and the collateral that is backing it, such as Bitcoin.BTCEthereumETHYou can also use any other acceptable token, such as a credit card.
The borrower can access more credit if the LTV is higher, compared to the crypto collateral they have posted. A lower LTV will result in a lesser loan amount for the same collateral.
Dori stated that crypto-backed lending is still at an early stage, but was optimistic about the future of this sector as it gains wider adoption.
As crypto loans become more popular, financial institutions will be able to offer them. crypto lenders go public On US stock exchanges and traditional financial firms (TradFi), crypto is accepted as collateral for loans.
Related: South Korea caps crypto lending rates at 20%, bans leveraged loans
TradFi is warming up to cryptocurrency-backed lending as Wall Street debuts crypto lending
Figure Technology, a crypto-backed lending company, made its debut on the Nasdaq exchangeOn Thursday, the US Stock Exchange, which is focused on technology, will be holding a conference.
Stocks in the company surged 24% intraday on day one, with a current market capitalization exceeding $6.8 billion. according Yahoo Finance is a great place to start.
JP Morgan Financial Services is also a potential buyer. offering crypto-backed loans If the financial giant decides to move forward, this would happen in 2026.
Magazine: Home loans using crypto as collateral: Do the risks outweigh the reward?
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Source: cointelegraph.com
