One of the top trends of 2020 in the blockchain space was the explosive growth of traditional financial products being reimagined for cryptocurrencies.
Although there are numerous projects taking different approaches to collateralized lending and borrowing with digital assets, the risk is high and many have gone bankrupt or failed to gain much adoption. This leaves the door open to established and well-connected companies in the industry to enter and quickly take significant market share.
In December, the GDA Group, a Canadian financial service provider for digital assets and one of the oldest and largest blockchain firms in North America, expanded their product suite with the launch of GDA Lending. This new branch of the GDA group of companies is focused on providing capital to institutional clients, with loan amounts between $250,000-$10 million. The firm says there will be “a non-recourse lending service backed by a tier-1 lender for USD, BTC, ETH, XRP, and EOS, with a loan-to-value ratio of up to 65%.” This puts GDA Lending immediately in the category of other institutional financial service providers such as Galaxy Digital, rather than focusing on the high-risk retail markets.
While the ability to build fast and not be hindered by the usual regulatory procedure is one of the cryptocurrency industry’s strengths, it is not without downsides. In November, the crypto trading desk Cred filed for Chapter 11 bankruptcy.