Bitcoin continues to find new uses in the financial world. Digital asset company, Fidelity has announced it will now give out loans backed by Bitcoin. The announcement, made on December 9, explains how this loans will be issued out.
Bitcoin now a Collateral Option
Fidelity says that this offering would allow its clients to use bitcoin as collateral for transactions. This means that instead of traditional assets, Bitcoins can now be used to secure a cash loan from the company. Loan seekers will need to deposit with Fidelity in Bitcoin before they apply for a loan. Due to the volatile nature of Bitcoin, these loans will come at a rate of 60%.
However, this is only open to those who are on the company’s institutional asset custody platform. The loans are targeted at institutions, but individuals can also follow a process to obtain these Bitcoin-backed loans. The American asset company is partnering with BlockFi on these loans. BlockFi is a cryptocurrency lending exchange that allows their customers to borrow with their coons on the exchange. Interested parties will need to open a block to account to take advantage of these new loans.
Christine Sandler, head of Sales and Marketing for Fidelity believe that the loans come at the right time. She said the business and marketing momentum this year showed Fidelity that a need gas to be met. The momentum showed “institutional investors are looking for a more comprehensive offering in the digital assets space”. “We look forward to continuing to evolve our platform to meet their needs and deliver even greater value to our clients,” she concluded.
Fidelity Digital Assets has always been dealing in crypto, but this is a first of its kind service from the company. The Boston-based company has an impressive track record. It has helped millions of people invest life savings and has helped 22,000 businesses organize employee benefit programs. Fidelity believes this innovation will set the pace for bitcoin-backed loans in future.
