Blockfi the Cryptocurrency Backed Lending Platform Has Received Approval to Operate in California
Blockfi has announced that they have received a license approval for its lending platform to begin operating in California; making the service available in 44 states. The company initially raised $52.5 million in investment rounds lead by Michael Novogratz’s Galaxy Digital.
Blockfi is a cryptocurrency lending platform which allows users to get dollars by using their Bitcoin (BTC) or Ethereum (ETH) as collateral. Instead of users selling Bitcoin to raise funds, they will be able to apply for a loan and receive a decision from the firm about the loan terms on the same day. Once approved the user is required to deposit the BTC or ETH into a storage address where Blockfi can transfer the USD to the customer’s bank account. Users of the service can make payments in USD or crypto and can also get their loaned cryptocurrency back after its completion.
The approval of an operating license for California suggests an interest in the US for a crypto-backed lending platform that complies with the relevant regulations. The CEO of Blockfi, Zac Prince, said that ‘security and trust in this space for institutional investors is mission critical’ to their success. Blockfi has chosen Gemini - with its robust security practices and cold storage functionality - for their asset custody.
Prince believes the platform will appeal to individuals and corporations that want access to liquidity without selling crypto. All the while claiming to offer the lowest digital asset-backed loan rates in the US. The firm plans to expand and grow globally making their product as borderless as possible. Blockfi isn’t the only platform offering this with other organisations introducing crypto loans services such as Salt Lending, Coinloan or Ethlend.
We are seeing more crypto-backed loans entering the market as regulations of the space continues. We could see a greater number of institutions use these services to access liquidity instead of cashing out Bitcoin or crypto.
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