Institutional clients holding Ethereum can now access bank-grade loans, with the ETH held in custody as collateral
Crypto custody and digital bank provider Anchorage Digital is now offering an Ethereum-backed lending product to institutional investors. Digital Asset Bank will offer the lending service in partnership with BankProv, an FDIC-insured bank currently ranked as the tenth oldest legacy bank in the United States.
The crypto bank already offers secured loans to customers who hold Bitcoin. But now institutional clients can borrow in USD on their Ethereum holdings, in a simple agreement that allows clients to continue holding their crypto positions. To protect itself from defaults, the bank will hold Ethereum as collateral.
This is happening despite the crypto space continuing to show an increase in demand for ETH loans, despite a recent weakness decimating price gains. Inflows into Ethereum have skyrocketed over the past week, with investors more likely to see the price crash as an opportunity to buy the cryptocurrency at a bargain price.
According to Dave Mansfield, CEO of BankProv, the partnership with Anchorage is in line with the “Mission and belief that the crypto market should be given the same access and rights to traditional financial instruments as any other legal, well-capitalized and law-abiding company …“
Digital banks bring people to cryptocurrency
In January, Anchorage received approval from the Office of the Comptroller of the Currency (OCC) to become the first federally chartered crypto bank. The charter allows Anchorage to provide custodial services to traditional banks that want to offer crypto-related services.
On February 25, Anchorage announced that the Series C funding round has raised $ 80 million to be used to expand digital lending. GIC, the sovereign wealth Fund of Singapore, led the financing, with participation from Blockchain Capital, Lux and Indico.
Elsewhere, UK-based digital bank Revolut has announced plans to add more cryptocurrencies to the list of supported coins. The bank’s app already supports 21 tokens, with Polygon (MATIC), Cosmos (ATOM) and Chainlink (LINK) among the latest additions.