in June. Perhaps truer words have never been spoken, as the market value of all cryptocurrencies has doubled to $1.3 trillion this year, recovering from last year’s crash.“Since the soft launch of our lending offering on Sept. 13, we’ve been surprised by how much demand there is for crypto-secured loans,” Alexander Blume, managing partner at SEC-registered investment advisor Two Prime, told CoinDesk.
The loans are typically overcollateralized, meaning the value of the collateral is far greater than the loan’s value. It ensures the lender has some cushion to protect against losses from a potential decline in the value of the collateral asset. The arrangement allows miners or investors to keep their crypto holdings while sourcing additional fiat money to fund operations and yield-generating strategies.
The three firms declared bankruptcy last year, freezing depositors’ accounts and their ability to withdraw their money. The episode drew the ire of U.S. regulators.